It’s a well-established market truism, advocated by everyone from Warren Buffett on down, that airlines make for terrible investments. Number two carriers in Australia, in particular.
“Investing in Australian airlines is like filling up a blue bin at the back of a supermarket with $100 bills and setting it on fire — even private equity funds wouldn't have enough capital,” Michael Gajic, partner at law firm Squire Patton Boggs, told Capital Brief.
One of the few entities that does have enough capital is Qatar Airways, itself backed by the gas-rich Qatar government. And its deal today to acquire a 25% stake in Virgin Australia actually looks like a good one for everyone involved, at least strategically.
If it succeeds — and it looks likely it will — Bain will get to reap the first fruits of its labour since plucking the Australian airline out of administration during the Covid-19 pandemic and returning it to the skies. And Qatar will get to funnel Australian travellers into Doha and snatch the capacity it was ultimately denied last year, triumphing over Canberra and Qantas’ veto power.
