While we’ll see if this materializes, there are reports that Qatar Airways is preparing to invest in Virgin Australia.

Qatar Airways could buy 20% stake in Virgin Australia

Qatar Airways is reportedly negotiating to take up to a 20% stake in Virgin Australia, in a deal that could shake up the Australian aviation market. Qatar Airways is of course owned by the Qatari government, while Virgin Australia is owned by Bain Capital, and has been wanting to go public.

According to sources familiar with the transaction, a deal could be announced as early as next week. However, regulatory approval would need to be obtained from the Foreign Investment Review Board, and it’s possible that the government may block the transaction, especially with Qatar Airways being owned by a foreign government.

Sources also claim that at one point Singapore Airlines had been close to taking a stake in Virgin Australia, but that didn’t end up happening.

The motive for investing in Virgin Australia is obvious

Qatar Airways and Virgin Australia have had a partnership since 2022, including a codeshare agreement, reciprocal loyalty benefits, and more.

On the surface, people might be confused by this partnership. Qatar Airways and Qantas both belong to oneworld, so you’d think that the two airlines would have close cooperation. Well, that’s very not much the case, despite their shared alliance membership:

• Qantas has a joint venture with Emirates, so prioritizes that partnership over the one with Qatar Airways
• For years, Qantas has been actively trying to block Qatar Airways’ growth in Australia, as Australia’s government has protectionist policies in place for Australian airlines

Generally if one airline buys a stake in another, it’s primarily because the airline hopes for closer cooperation, and to have more control over business decisions at the other airline. So that raises the question of what Qatar Airways would hope to gain with a Virgin Australia investment, given that the airlines already have a partnership:

• Does Qatar Airways hope that Virgin Australia petitions the Australian government to help it get more access to the Australian market?
• Given the bilateral agreements in place, I can’t help but wonder if the goal might actually be for Qatar Airways to supply Virgin Australia with wide body jets, and then have the airline resume long haul flights, adding routes to Doha above the limits that Qatar Airways is currently subjected to

While that latter idea is perhaps a bit out there, I wouldn’t be surprised to see it. It would essentially be a way to bypass any restrictions on Qatar Airways’ service to Australia, since currently no Australian airlines fly between Australia and Qatar.

It’s also kind of funny that Qatar Airways has acquired some former Virgin Australia Boeing 777s, and has maintained the interior. Could those planes somehow end up back at Virgin Australia? I’m getting ahead of myself here, but…

Investing in airlines comes with (serious) risks

I get that the Qatari government has deep pockets, but I can’t help but emphasize what a horrible track record Gulf carriers generally have with investing in foreign airlines.

For one, Etihad lit billions of dollars on fire, as it tried to create a global network of airlines that it invested in, ranging from airberlin, to Air Serbia, to Air Seychelles, to Alitalia, to Jet Airways, and more. Etihad’s airline acquisition strategy at the time may have been the worst investment strategy we’ve seen in the history of the airline industry, as all the airlines have either liquidated, or Etihad just cut ties.

Even in the case of Qatar Airways, many years back the airline acquired Italy’s Meridiana, and rebranded it as Air Italy. That airline also liquidated.

It seems that Qatar Airways is now slowly looking to invest in some airlines again, between this Virgin Australia plan, plus Qatar Airways’ intent to acquire stakes in two African airlines, including RwandAir. Admittedly there’s a bit more logic to this strategy.

For example, in the case of RwandAir, Qatar also owns a majority stake in Kigali’s new airport, so it’s part of a much larger plan.

Bottom line

Qatar Airways is reportedly in negotiations to acquire a 20% stake in Virgin Australia. The oneworld carrier has been trying to grow in Australia, but has been prevented from doing so, as Qantas has been campaigning against the airline. That’s why Qatar Airways and Virgin Australia have a partnership in the first place.

While airline investments often don’t end well, I imagine Qatar Airways sees this as a strategy to grow in the country. I also wouldn’t be surprised if we see Qatar Airways help Virgin Australia to resume long haul flights, particularly to and from Doha.

What do you make of Qatar Airways investing in Virgin Australia?