Virgin Aust boss hoses down Qantas' fears

Virgin Australia's boss has joined its new financial backers Etihad Airways in attacking Qantas over its campaign against the Middle Eastern airline's investment.

Etihad won Australian Foreign Investment Review Board approval on Thursday to increase its stake in Virgin Australia, the nations second largest carrier, from just under five per cent to 10 per cent.

Virgin Australia chief executive John Borghetti ridiculed suggestions the investment would threaten Qantas' existence, with the national carrier having warned the federal government that state-owned Etihad could fund a flooding of Australia's domestic capacity and steal its markets.

"I think people really are jumping at shadows and some people need to take a cold shower and just relax," Mr Borghetti told a business lunch in thinly-veiled attack on Qantas boss on Friday.

"Do they think that all of a sudden that a 10 per cent shareholding is going to somehow enforce the way we run the company and somehow bankroll the flooding of capacity in this country?

"I am really intrigued: we've got a New Zealand airline that owns 19 per cent of us, we've got Richard Branson or his company owning 26 per cent of us, so if someone was going to put a lot of money into us and flood the market I would think it would be these guys with bigger shareholdings.

"It's just not logical."

The comments come after Etihad chief executive James Hogan was reported on Friday as saying Qantas' actions lobbying against the investment were out of step with mainstream Australia.

Mr Hogan told The Australian newspaper that Etihad might increase its stake to 19 per cent.

Qantas' frustration stems from the fact that it is restricted from having foreign ownership above 49 per cent.

Its international operations are currently posting losses and have suffered from industrial action, while Virgin has benefited and increased its profits.

Virgin shares closed half a cent higher at 39.5 cents while Qantas also lifted half a cent to $1.065.

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