Virgin Australia is taking back full ownership of its Velocity Frequent Flyer program.
Virgin will buy minority stakeholder Affinity Equity Partners’ 35% stake as it takes advantage of its one business unit which is performing above expectation.
Virgin will pay $700 million for the stake.
"The Group confirms that it has entered into a term sheet with Affinity to buy back its 35 per cent minority investment for $700 million," Virgin said.
It makes sense for Australia’s number two carrier as Velocity is a rare positive for an airline which saw its shares sink to 10-year low recently.
It announced a full-year loss, and responded with 750 job cuts in a bid to shave off $75 million in costs, citing fuel and foreign exchange ‘headwinds.’
The airline is conducting a full network review with ‘potential withdrawals from certain markets which are uneconomical for us’ CEO Paul Scurrah said recently.
Still, the Velocity frequent flyer business performed well by adding more members and boosting earnings by more than 10% to $122.2 million.
