Gulf carrier Etihad Airways has raised its stake in Virgin Australia to almost 20%.

The national airline of the United Arab Emirates made its first investment in Virgin Australia in June 2012, paying an estimated A$37.5 million for a 3.96% stake, and just three months later more than doubled that to 10%.

At 19.9%, Etihad Airways has now reached the threshold approved by Australia’s Foreign Investment Review Board.

Etihad president and chief executive James Hogan said: “We are delighted to have reached this milestone.

“It reflects our strong support for the business strategy and management team of Virgin Australia and our enduring commitment to the Australian market.

“It also reflects the close working relationship between our two airlines and we look forward to strengthening its commercial foundations.”

Etihad and Virgin Australia signed a 10-year strategic partnership agreement in 2010 that includes codesharing on flights, joint sales and marketing activities, and reciprocal earn-and-burn on their respective frequent flyer programs.

The two airlines operate a combined 28 flights a week between Abu Dhabi and Australia with passengers having access to a combined global network of more than 280 destinations.

Etihad serves Sydney, Melbourne and Brisbane and plans to operate services to Perth in Western Australia in the future.

Hogan added: “The strategic partnership continues to deliver significant revenue streams and other benefits to each airline.

“Increasing our equity in Virgin Australia will further enrich the commercial benefits which the partnership delivers for both airlines as well as increasing the benefits to Australian travellers and visitors to Australia.”