"Virgin Australia privatisation talk hots up as Etihad struggles"

This article by the AFR's well-connected and well-informed Michael Smith suggests that with Virgin Australia now having a 'free float' of less than 7% – with Etihad facing financial trouble which could lead to a sell-down or sell-out of its 21.8% stake – and with the opportunity for Singapore Airlines and Virgin's new Chinese chums HNA and Nanshan Group to each boost their stake – putting that all together, Smith posits that 2017 could see Virgin Australia end up being fully privatised (with no public shareholding).

Whilst Virgin Australia's profitability might be questionable in the short term - as the article points out - Etihad's investments in Alitalia and Air Berlin are far more problematic and are most likely to be liquidated. One could also look with a keen eye at some other allied EY investments in the Indian subcontinent.

Certainly, with at least 3 'majors' involved with Virgin Australia's shareholding, it is not undeniable that Virgin will at some stage be delisted through total privatisation. However, I am not so convinced that the time has arrived.

It seems that the ME3 (EY, EK, QR) are coming in for a bit of a hard time and the cynics are out. Yes, EY's figures at DOH have been down a little in Oct/Nov 2015 (latest available figures) in line with overall DOH reduced pax loadings. But more worrying is the 75% downturn in EK's (Emirates) annual profit for 2016 vs 2015.

Whilst many airlines have declared record profits in the 2015/6 Financial Year, I suspect that the rose-coloured glasses will come off for FY 2016/7 as overcapacity and increased fuel rates start to kick in. Might be a very interesting year to watch for financial performance at all global airlines.

Do you think if Etihad were to sell their shares in Virgin they would not resign once their code share agreement ends? I flew Etihad for the first time last year in J and was quite happy with the on board service, the 388 and the First Class lounge in Abu Dhabi! Would hate to have to stop flying. 

Side note: Although their 388 was great in J I came back on a 77W and the interiors were extremely dated!