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Sun 22 Jul 2012 12:02 PM

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No plans for full takeover of Virgin Aus - Etihad boss

James Hogan dismisses Qantas's claim Abu Dhabi carrier's investment is threat to market

No plans for full takeover of Virgin Aus - Etihad boss
Etihad Airways CEO James Hogan.

Etihad Airways boss James Hogan has dismissed claims its increased stake in Virgin Australia is part of a long-term plan to gain full control of the carrier, and slammed accusations by Qantas that the investment is a threat to the Australian domestic market.

Virgin Australia announced in February it had restructured its domestic business to allow foreign investment. Etihad then invested in Australia’s second largest carrier and last week the Abu Dhabi airline was granted permission to increase its stake to ten percent.

In an interview with The Australian newspaper this weekend, Etihad CEO Hogan left open the possibility that the carrier may up its stake in Virgin Australia to 19 percent. However, he described claims the company is aiming for full control of the airline as “ridiculous”.

"What we won't do is get into a position where it means we take control of the business," Hogan was quoted as saying. "We can't run an Australian airline from Abu Dhabi, nor do we intend to."

The investment by Etihad in Virgin Australia has been met with a hostile reaction from Qantas, the Sydney-based flag carrier and Virgin’s main rival.

Press reports in Australia claimed Qantas, which reported a US$450m loss in its international operations last year, has warned the Canberra government the increased presence of Etihad was a threat to its market share.

"Virgin/Etihad will be able to flood the market with capacity until its competition is forced to significantly reduce its own operations or worse," Qantas is alleged to have said in a leaked document published by The Australian.

Hogan, who was born in Melbourne, hit out at Qantas and said it was out of touch with mainstream Australian opinion and should focus on its own business.

"As a very proud Australian, I know that this is not representative of the market or the country or the people," Hogan was quoted as saying. "It is a great shame the business (Qantas) has used this as a tactic. The UAE has a great relationship with Australia in trade, defence and in a whole range of areas.”

Etihad has pursued a range of stakes in global carriers, including Germany’s airberlin and Ireland's Aer Lingus, and Hogan said he had not encountered strong opposition in any other markets it has invested in.

"In other markets, we have not seen these sorts of reactions from national carriers. To see it being used to mask their own real issues is disappointing."

Virgin Australia’s other foreign stakeholders include Virgin Group (26 percent) and Air New Zealand (19.9 percent).

Virgin Australia and Qantas both declined to comment on Hogan’s quotes when contact by The Australian.

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John 7 years ago

The simple reality is Hogan talks too much, way more than any other airline chief in the world and way above his fighting weight. If he kept it down a bit, wound his neck in and concentrated on just running the shop he could achieve much more. He makes too much noise for his own good.