Etihad Airways has confirmed that it has acquired a 3.96 per cent stake in Virgin Australia Holdings.

The Abu Dhabi-based airline says the stake has been built over recent weeks through purchases on the open market. It adds that the investment in Virgin Australia’s domestic operations significantly strengthens the 10-year strategic partnership set up by the two carriers in August 2010.

Etihad Airways and Virgin’s V Australia operate 24 flights a week between Abu Dhabi and Australia and passengers have access to a combined network of more than 150 destinations.

Etihad holds stakes in a number of foreign airlines. In December 2011, Etihad raised its stake in Air Berlin to 30 per cent from just under 3 per cent for $97m. Etihad also increased its stake in Air Seychelles to 40 per cent in a bid to expand its reach and compete against its larger Gulf competitors.

In May, Etihad Airways has acquired a 3 per cent stake in Ireland’s Aer Lingus. The two airlines have focused on code-sharing opportunities, which enable them to sell one another’s seats.

Etihad Airways has strategic codeshare partnerships with 35 airlines around the world.