Qantas share price outperforms as Virgin eyes merger opportunities

Airlines are still recovering from the years long pandemic travel disruptions, fuelling merger speculation.

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Key points

  • Qantas share price dips into the red 
  • Air New Zealand has refuted media speculations regarding a potential merger transaction 
  • Virgin may still move forward with plans to acquire Rex 

The Qantas Airways Limited (ASX: QAN) share price is dipping in Friday's trade, down 0.2%.

Qantas shares closed yesterday trading for $5.35 and are currently trading for $5.34 apiece.

While a loss is a loss, the Qantas share price is holding up better than the broader market, with the benchmark S&P/ASX 200 Index (ASX: XJO) down 1.1% at this same time.

The ASX 200 sell-off follows another day of significant losses in US markets, with US futures pointing to another rough day ahead on the NASDAQ-100 (NASDAQ: NDX) and Dow Jones Industrial Average Index (DJX: .DJI).

But, what's this about Qantas' competitor Virgin Australia eyeing merger opportunities?

Is Virgin Australia looking to spread its wings?

If you cast your mind back a few years, you will likely recall that Virgin Australia used to trade on the ASX. And, indeed, it may do so again with a potential initial public offering (IPO) flagged for as early as next year.

Virgin entered voluntary administration in April 2020. That was right when domestic and global air travel came to an abrupt halt amid the early months of the pandemic.

Bain Capital bought Virgin in October 2020 for $3.5 billion and continues to hold the airline today.

Regarding Virgin's acquisition plans, in an article published by The Australian after markets closed yesterday, the paper said its sources had indicated Virgin and Air New Zealand Limited (ASX: AIZ) have discussed a merger. The column also said Virgin is investigating acquiring Regional Express Holdings Ltd (ASX: REX).

According to the article, unnamed sources reported that investment banks Goldman Sachs and Jarden have been offering assistance to Virgin regarding possible merger plans. It was said the plan would involve "a back door dual listing" on both the ASX and the New Zealand Exchange (NZX).

As far as the Air New Zealand discussion goes, the airline responded to the media merger speculations this morning, stating:

Air New Zealand confirms that it has not been approached, and is not in discussions with any parties, regarding a potential merger transaction.

As for any potential impact on Qantas shares, if Virgin were to acquire Rex, The Australian said its sources indicated that would only move forward if Rex were to return to solely flying regional routes.

Qantas share price snapshot

The Qantas share price has outperformed in 2022, up 3.7%. That compares to a 10.8% loss posted by the ASX 200.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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