Australia’s competition watchdog is mulling over Virgin Australia Holdings Limited’s
(ASX:VAH) plans to take a 60 per cent stake in Tiger Airways Australia.
Virgin announced it would buy a $35 million interest in the budget carrier in October 2012 at the same time it inked a $95 million deal to buy Skywest Airlines Limited
(ASX:SXR).
Chairman of the Australian Competition and Consumer Commission (ACCC) Rod Sims told ABC News the merger is complicated and is a complex equation to weigh up.
Mr Sims says if the merger proceeds Virgin will be in a much better position to take on Jetstar by using Tiger but will be taking out the third player in the aviation market.
If approved the Virgin and Tiger alliance plans to invest up to a combined $62.5 million to grow the low-cost carrier and expand the fleet from 11 to 35 aircrafts by 2018. A rulling from the ACCC is expected at the end of January 2013.
Virgin Australia posted a net profit of $22.8 million in the 2012 financial year.
