Singapore Airlines has increased its stake in Virgin Australia to 19.9 percent, boosting its influence at the carrier at a time of industry jostling to secure lucrative routes in Southeast Asia.
Australia's airline industry has been a battleground for global airlines seeking partnerships in recent months, with Qantas Airways establishing a wide-ranging alliance with Emirates Airlines.
Singapore Airlines bought an additional 9.9 percent for A$123 million ($126 million) from Richard Branson's Virgin Group, becoming the biggest shareholder in Australia's No.2 carrier.
The deal, which is subject to approval from Australia's Foreign Investment Review Board, takes Singapore Airlines' holding to the maximum limit allowed before a full takeover must be launched. A spokesman for the company said it had no plans at this point to further increase its holding.
"While it is currently unclear whether Branson is looking for a complete sell down, the transaction moves more of the voting power into the hands of the strategic operating partners," Macquarie Equities analysts said in a note.
"At this point there is no talk of a takeover from any of the parties, however, the interest from the partners does confirm the strength of Virgin Australia's virtual international network going forward, as it attempts to compete effectively with Qantas's new reach given the Emirates deal," they added.
Singapore Airlines has been keen to establish a stronghold in Australia to secure passenger feed on to its long-haul services. It has added more double decker Airbus A380s and increased frequencies in the Australian market, hoping to capture passengers disenchanted with Qantas' switch from Singapore to Dubai as its new transit hub.
The move comes a day after Virgin received competition regulator approval to buy a controlling stake in Tiger Australia from Singapore Airlines' budget associate, Tiger Airways.
The deal, which must also be approved by the FIRB, marks a return an effective duopoly of Qantas and Virgin by removing Tiger as an independent third player.
Singapore Airlines, which first bought a 10 percent stake in Virgin in late 2012, is paying A$0.48 per share, a 5.5 percent premium to Virgin Australia's last traded price.
The stock was up 2.2 percent in morning trade at A$0.47.