Etihad Airways has doubled its stake in Virgin Australia to 10 per cent, six weeks after receiving the all clear from the federal regulator.
The Middle East carrier says it has bought 221 million shares on the open market.
"We are very pleased to have reached this threshold," Etihad chief executive officer James Hogan said in a statement late on Sunday.
"We support the management strategy of Virgin Australia and will continue to work closely with them on ways to improve our business."
Mr Hogan reiterated that Etihad was not interested in becoming a majority shareholder or taking control of Virgin Australia.
"Our small equity stake reflects the strong working relationship of both airlines and again demonstrates our enduring commitment to the Australian market," he said.
Etihad and Virgin operate 24 flights per week between Australia and Abu Dhabi, which involves codesharing, reciprocal frequent flyer benefits and joint marketing.
Six weeks ago Etihad received Foreign Investment Review Board (FIRB) approval to increase its holding from five per cent to 10 per cent.
Etihad has also amassed minority stakes in overseas carriers Air Berlin, Air Seychelles and Aer Lingus. The purchases are a way for Etihad to gain an edge over larger Gulf rivals Emirates and Qatar Airways.
Other foreign entities with a significant stake in Virgin Australia, the country's second-largest carrier, include Sir Richard Branson's UK-based Virgin Group and Air New Zealand.