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May 27, 2017

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Virgin Australia sells stake to Singapore, pounces on Tiger

SYDNEY -- Virgin Australia on Tuesday sold 10 percent of its business to Singapore Airlines while agreeing to buy a 60-percent stake in Tiger Airways Australia as it upped the ante in its battle with Qantas.

In a slew of announcements, the country's second-biggest airline after the Flying Kangaroo also said it was making a AU$98.7 million (US$101.9 million) takeover offer for Perth-based Australian regional carrier Skywest.

Virgin agreed to pay AU$35 million (US$36 million) for its holding in Tiger, the loss-making subsidiary of Singapore's Tiger Airways, while Singapore Airlines bought its stake for AU$105 million.

"The transactions overall represent a monumental shift for Virgin Australia which, if approved, will see a more even playing field in Australian aviation," Macquarie analysts said in a note.

"They arguably create a replica of Qantas."

Virgin chief executive John Borghetti said the deals were designed to accelerate the airline's growth and increase competition in Australia, where the domestic market has long been dominated by Qantas.

The acquisitions of Tiger and Skywest would boost Virgin's presence in the budget and regional markets, "enabling us to fast-track our expansion in these areas and become a stronger competitor."

"These transactions will bring important benefits to Australia, driving growth in jobs, tourism and competition," said Borghetti, adding that he planned to make the carrier Australia's "airline of choice in all markets."

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