Virgin Australia has sold just over one-third of its Velocity Frequent Flyer program in an attempt to turbocharge the scheme and double its membership from 4.5 million to 7.5 million in the next three years.
The airline reaped $336 million from the sale of a 35% stake in its Velocity business to fund manager Affinity Equity Partners, in a purchase which values the entire program at $960 million.
Velocity Frequent Flyer will remain part of the Virgin Australia Group but gain its own Velocity Frequent Flyer Board, although parent airline will retain a majority stake in Velocity Frequent Flyer and majority representation on the Board, including the appointment of Chair and 65 per cent of voting rights of security holders.
"Today’s announcement marks a significant milestone as it validates the success of the Velocity Frequent Flyer business to date" said Virgin Australia CEO John Borghetti.
“The program remains a key value driver for the Virgin Australia Group and through access to additional capital and resources, this transaction will allow us to accelerate the program’s strategy and realise its full potential as a world class loyalty business."
“Affinity brings a wealth of experience in driving rapid and sustainable growth across a diverse range of businesses and we look forward to working with them to enhance value."
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