Virgin Australia Set to List on Stock Exchange After Five-Year Hiatus

Virgin Australia is preparing to make its comeback to the stock market, nearly five years after its descent into administration, with an anticipated A$685 million (£328 million) flotation.

The airline, founded by Sir Richard Branson and presently owned by Bain Capital, is set to relist in Australia, highlighting a resurgence in domestic tourism following the pandemic and reflecting confidence that geopolitical tensions will not hinder investor interest.

In 2020, Bain Capital, the American private equity firm, acquired Virgin Australia for A$3.5 billion, which included its debt, after the airline’s collapse amidst the early Covid-19 outbreak. The Australian government and stakeholders opted not to bail it out. As the second-largest airline in the country, Virgin Australia was one of the most significant corporate failures as the pandemic caused a halt in tourism.

Branson regained a personal investment stake following the company’s exit from administration, expressing in 2023 that he still feels a strong attachment to the airline.

According to a term sheet obtained by Reuters, Bain’s ownership will decrease to 39.4% from approximately 70%, while Qatar Airways, which has recently acquired a stake in the airline, will hold onto a 23% share.

The shares will be priced at A$2.90 each, according to the term sheet, setting the company’s value at A$2.32 billion on a fully diluted basis.

Following Virgin Australia’s plunge into administration, Branson had offered his Caribbean resort, Necker Island, as collateral when seeking a £500 million loan from the UK government to assist his Virgin Atlantic airline during the pandemic.

The UK government denied the request; however, Virgin Atlantic later secured a £1.5 billion rescue package from Branson’s Virgin Group along with support from investors and creditors. This deal involved Branson liquidating £550 million worth of shares in his space venture, Virgin Galactic.

The arrangement preserved thousands of jobs, although around 3,500 positions were ultimately cut. Branson revealed in 2023 that during the pandemic’s peak, he feared for the survival of his entire business empire.

“There was a time when it really looked like we were going to lose everything,” he remarked to the BBC, admitting that he felt hurt by the backlash against his plea for government support. In response, Angela Rayner, the deputy leader of the Labour Party, suggested via Twitter that Branson should sell his private island to compensate his staff during challenging times.

Founded in 1984 with a single second-hand jumbo jet leased from Boeing, Virgin Atlantic received initial skepticism from the aircraft maker about the viability of an airline named Virgin. The airline is known for enhancing customer experience and offering competitive pricing, although it has faced multiple crises over the years.

In its efforts to recover over the past few years, Virgin Australia has reduced its international operations. Nevertheless, it plans to restart long-haul flights through a partnership with Qatar Airways, a state-owned company.

Prior to its downfall in 2020, the airline was attempting to transition from being a low-cost carrier to providing a broader service that could compete with the market leader Qantas.

As of March, Virgin Australia holds a 34.4% share of the domestic market, closely following Qantas, which stands at 37.5%, based on a report from the Australian Competition and Consumer Commission.

This upcoming listing represents the most substantial flotation in Australia for the year thus far, with Virgin Australia shares expected to commence trading in Sydney on June 24.