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Tue 11 Feb 2014 05:03 PM

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Branson says he won't sell Virgin Australia stake

Airline founder also defends $300m investment by UAE flag carrier Etihad, Air NZ and Singapore Airlines

Branson says he won't sell Virgin Australia stake
Founder of Virgin Atlantic Airways

Virgin Group founder Richard Branson has said he is not interested in selling his stake in Virgin Australia, which is part-owned by UAE flag carrier Etihad.

In May last year, Branson had hinted that he would consider giving up his remaining 13 percent of the airline, leading to speculation that Etihad could buy out Branson to double its then-9 percent share.

The airline went onto buy up Virgin Australia shares on the Australian Stock Market, doubling its claim to 19.9 percent in October, making it an equal partner with Air New Zealand and Singapore Airlines.

Any sale would now open the door to a fourth airline claiming an influential position in the airline, with Australian foreign ownership rules limiting each shareholder to less than 20 percent ownership of a company.

But Branson threw cold water on the idea during a visit to Dubai on Monday.

"We have no plans to sell our stake in Virgin Australia," he said.

The British billionaire also weighed into the bitter dispute between Virgin Australia and its rival, Australian flag carrier Qantas, which last year signed a groundbreaking alliance with Dubai airline Emirates.

Qantas boss Alan Joyce has criticised the recent injection of $300m into Virgin Australia by Etihad, Air New Zealand and Singapore Airlines, claiming they were orchestrating a “virtual takeover” of Virgin.

Etihad CEO James Hogan, as well as a representative from the other two airlines, is due to take up a board seat as part of the deal.

"If Qantas is allowed to have [alliances] then I think Virgin Australia has a right to try to get alliances too. Virgin Australia have fallen completely within the rules,” Branson said.

"Alan Joyce is in deep s--- because he drew a line in the sand; he said that Virgin were not going to have 35 percent of the market and he's lost hundreds of millions in order to try and hold that line.

“Now he's appealing to the government to give him money and holding his hat out like a begging bowl to the government.

"These airlines are just investors in the country. He's raised hundreds of millions from his shareholders over the last few years.”

Branson also slammed the Emirates-Qantas alliance as being uncompetitive.

“Good government would never have allowed that to happen,” he said.

He criticised the increasing number of partnerships between major airlines, including that between Virgin Atlantic and Delta, claiming it would drive up prices forever.

“Competition brings better fares and better quality than cooperation but the regulators in their wisdom have decided to create a number of very big, very big alliances.

“If you're in an alliance and you're on the same route as your alliance partner, you know what's going to happen: fares are going to go up and why should they do better service?

“And it's going to be incredibly difficult for any new airline to ever, ever, ever get up and compete with that.”

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