Australia Won't Block Virgin Australia's Tiger Buy

MELBOURNE--Australia's antitrust regulator won't block Virgin Australia Holdings Ltd.'s (VAH.AU) 35 million Australian dollars (US$36 million) acquisition of a 60% stake in low-cost carrier Tiger Airways Australia, a move that will allow it to go head-to-head against rival Qantas Airways Ltd.'s (QAN.AU) no-frills Jetstar unit.

In deciding not to oppose the deal, the Australian Competition and Consumer Commission, or ACCC, said that without a takeover Tiger--which hasn't made an operating profit in six years operating in the country--was "highly unlikely" to remain in the local market.

"The ACCC would always prefer to see a greater number of independent airlines competing in the domestic market," it said in a statement Tuesday. "However, our investigations showed that Tiger Australia had been unable to establish itself as a viable competitor despite substantial investment and numerous changes of management and strategy over the years."

Virgin Australia is the second-largest domestic airline operator in Australia, behind Qantas. It counts among its largest shareholders entrepreneur Richard Branson's Virgin Group, Air New Zealand Ltd. (AIR.NZ) and Singapore Airlines Ltd. (C6L.SG).

Singapore Airlines has an almost 33% stake in Tiger Airways Holdings Ltd. (J7X.SG), which will retain a 40% stake in Tiger Airways Australia.

Write to Robb M. Stewart at [e-mail]

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