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Virgin in Singapore equity tie-up
Virgin in Singapore equity tie-up

Singapore Airlines has bought a 10 per cent stake in Virgin Australia for $105 million, while Virgin, in turn, has taken a 60 per cent stake in low cost carrier Tiger Airways Australia for $35 million.

Singapore, which entered an alliance agreement with Virgin in June 2011, has acquired almost 246 million Virgin shares at 42.88 cents each.

"Singapore Airlines is an important strategic alliance partner of Virgin Australia and we are very pleased to have their support as an investor," Virgin chief executive John Borghetti said in a statement.

"We believe this investment demonstrates their confidence in our strategy and it enables Virgin Australia to fast track its growth plans."

The deal has received approval under the Australian Government's Foreign Investment Policy, Virgin said.

Virgin's other key shareholders include Richard Branson's Virgin Group which has 26 per cent, Air New Zealand with 20 per cent and Etihad Airways with 10 per cent.

News of the Singapore deal came as Virgin Australia announced it had bought a 60 per cent stake in low cost carrier Tiger Airways Australia for $35 million.

The deal will allow Tiger to put on more flights and offer more attractive fares to customers, Tiger says.

Tiger and Virgin will spend up to $62.5 million on Tiger Australia to increase its fleet from 11 aircraft to 35 by 2018.

Tiger will continue to use the Tiger brand for at least another 20 years.

Tiger Airways chief executive Koay Peng Yen says it's a significant step forward for the company.

"The joint venture will bring about a stronger and more competitive Tiger Australia, and allow us to deploy more capacity and attractive budget offerings to our customers," he said in a statement.

Virgin chief executive John Borghetti said the deal would give his airline greater access to the budget market.

"By partnering with Tiger Airways, we can use our expertise to leverage Tiger Australia's competitive cost base and build a sustainable budget carrier," he said in a statement.