Virgin Australia to buy rest of frequent flyer programme for $481 mln
Adds background on deal, Velocity
Sept 16 (Reuters) - Virgin Australia Holdings Ltd VAH.AX on Monday said it entered an agreement to buy back the 35% of its Velocity frequent flyer programme that it does not already own for A$700 million ($481 million) from private-equity group Affinity Equity Partners.
Australia's second-largest airline sold the stake in Velocity to Affinity in 2014 for A$335 million and the private equity firm has this year been canvassing exit options, including a potential IPO.
The deal values the business at around A$2 billion.
Completion of the deal is subject to funding and regulatory approval, Virgin said in a statement in response to media articles.
Exclusive talks between Virgin and Affinity were first reported by the Australian Financial Review on Sunday.
The loss-making airline is seeking to retain control of Velocity, which was a bright spot in its bleak annual results last month, with earnings before interest and tax from the division up 12% to A$122.2 million.
The value of loyalty schemes lies in the steady income from banks, retailers and other partners who pay up front for points and then pass them on to customers who typically do not redeem them with airlines for many months.
A representative from Affinity declined to comment.
($1 = 1.4539 Australian dollars)
(Reporting by Niyati Shetty in Bengaluru; Editing by Sandra Maler and Lincoln Feast)
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