National carrier Air New Zealand has increased its stake in Virgin Australia to boost its reach and earnings but reaffirmed it does not plan a takeover, the airline said on Tuesday.
Air NZ said it would raise its stake by up to 5 per cent to a maximum 19.99 per cent, although it would ensure that it did not breach the 49 per cent foreign ownership cap.
"Our increased investment in Virgin Australia continues Air New Zealand's strategy to develop scale and reach in this region," said Air NZ chief executive Rob Fyfe.
Air NZ, around 75 per cent owned by the New Zealand government, took its original stake in Virgin Australia in January following approval of a commercial alliance.
The two airlines code share flights between the two countries, and co-operate on scheduling and support services.
The two airlines pursued the alliance to compete more effectively against Australia's dominant carrier Qantas and its budget offshoot, Jetstar.
Air NZ, which last traded up 0.9 per cent at $NZ1.09, said it took advantage of weakness in Virgin's share price to raise its stake, paying $A0.297 a share, a 5.7 per cent discount to Virgin's closing price on Monday.
Reuters