Virgin Blue top shareholder leaves
July 15, 2008
The largest shareholder in Virgin Blue is to reduce its stake in the airline to reduce the risk posed by the struggling industry.
Toll Holdings, a freight company, will only keep 1.7% of its 62.7% stake in Australia’s second largest airline. The share disposal will take place through a special dividend to shareholders.
Airlines are struggling at the moment because of rising fuel costs. Several airlines have already collapsed.
Virgin Blue has said the move could lead the way for a possible takeover of the airline.
Toll Holdings have had to dispose of the shares in this way because they failed to sell its investment to other parties.
When the stake is handed to shareholders, co-founder Richard Branson will be the largest shareholder with 25.5%
Shares in Virgin Blue have lost around 75% of their value since the beginning of the year.
Paul Little, managing director of Toll, said that Virgin Blue was a 2non-core asset” for them and the aim of the disposal was to “reduce Toll’s exposure to the passenger aviation sector, which at times has been volatile.”
Virgin Blue are hoping to save on fuel costs and has implemented a 50m (Australian) dollar plan. Fuel costs accounts for 35% of its total costs.
Virgin Blue’s chief executive, Brett Godfrey, was upbeat about the news. He also said the airline was now in a position to seek “long-term strategic investors.”
“It certainly opens up a whole lot of other opportunities whether it’s for airlines or other funds to invest,” said Mr Godfrey.
See www.virginblue.co.au for more information on the airline.
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