Virgin Australia is to buy out loss-making budget carrier Tiger Airways Australia for A$1.
It will take full control of Tiger Airways from its current 60% stake in an effort to speed up a turnaround.
“We will benefit from the economies of scale and achieve profitability ahead of schedule by the end of 2016,” said Virgin Australia chief executive John Borghetti.
Virgin bought its first stake in the Singapore Airlines-backed venture for A$35 million last year.
But Tiger Airways has struggled to win customers in a slumping domestic market and recorded an first quarter underlying loss for 2014-15 of A$45 million.
Borghetti said: “Given the ongoing subdued consumer demand in the Australian domestic market, the growth of the Tigerair Australia domestic fleet is likely to be reduced.”
However, Virgin Australia will secure the brand rights to fly Tiger Airways Australia to a number of “short-haul international destinations” beyond its current domestic-only network.
This would increase the ability of Tiger to compete against Qantas-owned low-cost carrier Jetstar, especially on price-sensitive leisure routes to Bali and Phuket.
Virgin Australia said in August that its annual net loss tripled to A$355.6 million due to weak consumer sentiment, the country’s carbon tax and the cost of buying the original stake in Tiger Airways.
The takeover, subject to regulatory approval, is expected to be completed by the end of this year, Virgin said.