Macquarie has downgraded Virgin Australia (ASAX:VAH) to Neutral from Outperform following the airline's FY13 earnings downgrade. Although Etihad's on-market purchases are supporting VAH's share price, the stock's free float is falling below 30%, making it less relevant for index and other active fund managers. As such, the price target is reduced to 42c (current price $0.41). Similarly, BoA Merrill Lynch has cut earnings forecasts for VAH by 180% and 70% in FY13-14 and lowered its target to 52c. However, the broker retains a Buy on the stock noting the recent fall in the share price. Furthermore, support for the stock is offered at 37c book value and by Etihad looking to increase its stake from 10% to 20%. It has been debated that after the recent profit downgrade, VAH should consider privatisation through the buyout of the 23% free float by Singapore Airlines, Air NZ and Etihad.