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Etihad Airways has cemented a commercial pact with Virgin Australia by taking a 4% share in the airline for more than £23 million.

The fast-growing Abu Dhabi-based carrier says it is keen to raise its holding in Virgin Australia to as much as 10% as it expands its global presence.

Etihad raised its stake in Air Berlin to 30% last December. That was? followed by the airline taking a 40% share in Air Seychelles and almost 3% of Aer Lingus.

The UAE carrier and Virgin Australia joined forces in August 2010 to offer an expanded global network and increased loyalty rewards through reciprocal frequent flyer programmes and airport lounge access.

Virgin Australia became the first Australian airline to operate to the Middle East for 20 years when it launched direct flights to Abu Dhabi from Sydney in February 2011.

The two airlines offer a joint network of 110 destinations, including the 44 points served by Virgin Australia in Australia, New Zealand, the Pacific Islands, Asia and to Los Angeles.

Etihad said that acquiring stakes in other airlines would help it to take on rivals such as Emirates and Qatar Airways.

Chief executive James Hogan was quoted by Associated Press as saying: "We're building a strong business model. And part of that business model is partnerships.

"We do have two large competitors on our doorstep. And we will never match their aircraft order book."

He added: "Where we see opportunities to improve our business, stretch our networks and take out costs... we'll consider those a