Virgin move tricky for Air NZ sale

Air New Zealand's planned sale of its 26% stake in Virgin Australia struck a complication yesterday with the surprise addition of China's HNA Aviation Group to Virgin's share register through a A$159m share placement. The transaction, which dilutes Air NZ's holding to 22.5%, will go some way towards shoring up Virgin Australia 's balance sheet and, at A30c a share, establishes a ball park figure for the shares if and when Air NZ sells its stake. At A30c, the shares were issued at a 7.1% premium to Monday's closing price, and they rallied to just under that level after the deal was announced to the market. Post-placement, HNA will own about 13% in Virgin Australia, but it intends to increase its stake over time up to 19.99%. Analysts said the deal, struck without Air NZ's involvement, would complicate the sale process. "They have clearly placed new shares at a time when Air NZ is trying to sell its existing shares, so I guess the implications of that will only become clear in the next few weeks," said Salt Funds Management managing director Matt Goodson. Virgin Australia said it had formed a strategic commercial alliance with HNA that would accelerate its access to the rapidly growing Chinese travel market. Under the alliance, the companies will look to introduce direct flights between Australia and China. The deal means HNA will become a major Virgin Australia shareholder alongside Air NZ, Singapore Airlines and Etihad Airways. <br/>