Singapore Airlines has lifted its stake in Virgin Australia amid uncertainty over the future ownership of the Australian carrier.

The move comes as The Australian Financial Review’s Street Talk column on Thursday reported Singapore Airlines was viewed as the most likely buyer of Air New Zealand’s 25.9 per cent stake in Virgin.

In an announcement to the Singapore Stock Exchange on Wednesday evening, the Singaporean carrier said it now owned 23.11 per cent of Virgin, up from 22.91 per cent previously. Singapore Airlines said it had elected to physically settle a series of equity swaps it had entered into with a counter-party at a cost of $3.18 million, or 46.72¢ a share. That represents a significant premium to Virgin’s closing price of 35.5¢ on Wednesday.

Singapore Airlines is the third-largest shareholder in Virgin behind Air NZ with 25.9 per cent and Etihad Airways with 25.1 per cent.

It is unknown whether it has sought approvals for an even higher stake.

Singapore Airlines is a participant in a $425 million loan to Virgin alongside Air NZ, Etihad, and Sir Richard Branson’s Virgin Group.

In a note to clients, Citi’s credit desk said it was interesting that Singapore Airlines chose to physically settle the swaps over Virgin shares rather than settle by cash because it not only increased its shareholding but it also increased its participation in any equity injection or other form of shareholder financial support.

“So if one wanted to draw a ‘loose’ conclusion from last night’s announcement, it’s that Singapore Airlines does not seem to have objections to injecting further cash into Virgin,” Citi said.

Analysts view Singapore Airlines as the most likely party to use the opportunity presented by the Air NZ stake to make a full takeover bid for Virgin.

Other options for Air NZ could include selling the bulk of its stake to Virgin’s trans-Pacific partner, Delta Air Lines or to a Chinese carrier. However, Singapore Airlines would likely view a Chinese carrier as a competitor for Virgin’s Asian business.

“Singapore would be a natural fit in terms of the network and complimentary routes,” University of Sydney associate professor in aviation management Rico Merkert said.

“It would also gain more control over the airline. I think that is important, [Singapore Airlines has] tried before to get into Australia and had fairly serious talks with Qantas at one stage.”

Meanwhile, Qantas on Thursday announced it had appointed former secretary of the Department of Foreign Affairs and Trade Michael L’Estrange as a non-executive director.

Chairman Leigh Clifford said Mr L’Estrange had knowledge that added depth to the board at a time when the company was “carving out a strong, sustainable future” both domestically and internationally.