New Zealand Aviation NEWS: AIR New Zealand has confirmed it has bought 14.9 per cent of Virgin Blue for $145m and will not seek a board seat for at least six months.

The airline said today it had paid 44 cents a share for its stake using existing cash resources in an off-market transaction.

Air New Zealand chief executive officer Rob Fyfe reconfirmed there was no intention to go over 14.99 per cent and also confirmed the Kiwi carrier had no intention to seek a board seat for the first six months.

By late morning, Virgin shares were up 0.5 cent to 44.5c.

Mr Fyfe said the investment provided the Kiwi carrier with an interest in Australia’s second biggest carrier and access to opportunities in the growing Australian domestic marketplace.

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However, AirNZ had no intention of flying its own planes on Australian domestic routes.

“This is simply an investment in Virgin Blue that reinforces Air New Zealand’s strategy to grow its business in Australasia which is continually evolving as a single aviation market,’’ Mr Fyfe said.

“The Tasman alliance with Virgin Blue was a key step in this strategy. This investment cements the important relationship between our two airlines and demonstrates the confidence we have in Virgin Blue and its management to grow their business both within the Tasman alliance and beyond the scope of the alliance.’’

Analysts also saw the move as a strategic play by Air New Zealand to gain a bigger share of the domestic market.

UBS said the move indicated a desire for more formal co-operation between the two airlines.

“Virgin Blue’s domestic network is of strategic interest to Air New Zealand which faces a smaller captive market, lacks scale, and faces increasing competition,’’ it said. “(The) transaction would simply be another example of cross border alliances in the aviation industry.’’

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