Air NZ's Virgin Blue stake falls foul of Aussie rules
2:15 PM Monday Feb 21, 2011
Air New Zealand will have to dump a small portion of its stake in Virgin Blue Holdings after an independent report found the airline's shareholding breached Australia's foreign ownership rules.
The Brisbane-based airline found Air NZ's A$145 million stake had pushed foreign ownership levels to 49.78 per cent, beyond the statutory 49 per cent cap placed on airlines.
The New Zealand airline, which bought a 14.9 per cent stake to cement its trans-Tasman alliance with the Australian airline and give it additional exposure to Australia's domestic market, has already committed to selling it holdings until ownership ratios fell below the threshold.
Virgin will look at changing its constitution to let it automatically cash out any shares that braeched the cap without the need for a vote.
The changes will be put up for shareholder approval shortly.
The news comes after Australia and New Zealand leaders last week signed off on a deal lifting the threshold that requires official scrutiny when investing across the ditch.
Air NZ shares fell 0.7 per cent to $1.39 on the NZX, while Virgin Blue shares fell 2.5 per cent to 39 Australian cents on the ASX.