The Virgin Australia Holdings Ltd (ASX: VAH) share price is trading flat on Friday despite a positive development.
At the time of writing the airline operator’s shares are changing hands at 15.5 cents.
The airline operator’s shares haven’t move today despite news that the ACCC will not oppose its plan to work closely with Virgin Atlantic. This is on flights between Australia and the UK; via Hong Kong, Los Angeles, and any other future connecting points.
The ACCC’s authorisation will allow the two airlines to coordinate on a wide range of matters, such as jointly managing prices, inventory, and marketing strategies. These activities are not currently permitted through their existing arm’s length commercial codeshare and loyalty arrangements.
The ACCC has authorised the conduct until November 30 2024.
According to the ACCC’s media release, it notes that Virgin Australia and Virgin Atlantic are separate businesses whose services do not currently overlap on any route, and are unlikely to do so in the future.
ACCC Commissioner, Stephen Ridgeway, said: “The arrangements which have been authorised will not lessen competition on any route, and are likely to provide public benefits, including through improved scheduling and enhanced loyalty program benefits.”
Virgin Australia believes the cooperation will increase its passenger numbers, making its Hong Kong service more sustainable.
Despite this potentially meaning an increase in competition for Qantas Airways Limited (ASX: QAN), it hasn’t stopped the Qantas share price from pushing higher on Friday. Its shares are up almost 2% to $6.69 in morning trade.
Should you invest?
Overall, I think this is a positive for both Virgin Australia and consumers. However, I’m not a buyer of Virgin Australia’s shares just yet. I don’t think it is over the worst of its issues yet.
I am, however, a fan of Qantas and believe its shares would be great options for investors right now. This is due to their attractive valuation and generous dividend yield.
The post Virgin Australia share price flat after ACCC approves Virgin Atlantic agreement appeared first on Motley Fool Australia.
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