Virgin Australia operates 96 Boeing 737s on domestic and short-haul international routes. Photo: Andrew McLaughlin.
Virgin Australia has listed on the Australian Stock Exchange (ASX) for the first time in five years after the airline came back from near collapse during the COVID-19 pandemic.
The 24 June initial public offering (IPO) on the ASX saw the airline listed as VGN and opening at $2.90 a share, before quickly climbing to $3.13 within 30 minutes due to high interest.
Some 30 per cent of shares were offered at the IPO, representing a market capitalisation of around $2.3 billion and, as of Thursday afternoon (26 June), it was trading at $3.32.
The listing comes on the back of February’s sale of a 25 per cent stake to Qatar Airways, with the stated goal of delivering more international passengers onto its domestic routes and giving domestic passengers more international options.
The milestone represents a long road back for the airline which saw it enter voluntary administration managed by Deloitte in April 2020 at the height of the pandemic.
But the lack of passengers and the parking of aircraft during the pandemic was really just the straw that broke the camel’s back, as prior to this a price war with rival Qantas had seen both airlines’ margins significantly reduced.
While Qantas received a large Government bailout during the pandemic to allow it to maintain core staffing and to service lease payments and other overheads, Virgin Australia was sold to the US-based private equity giant Bain Capital for $3.5 billion.
Bain Capital immediately killed off low-cost subsidiary Tiger Airways which had never been able to make much market-share headway against Qantas-subsidiary Jetstar nor the mainline carriers and set about streamline Virgin Australia.
In 2023 the airline returned to profit after being repositioned to service the middle market between mainline and low-cost carrier carriers.
Virgin Australia CEO Dave Emerson rings the bell at the ASX to commemorate the IPO on 24 June. Photo: Virgin Australia.
Following the ASX bell-ringing ceremony, airline CEO Dave Emerson told media it was a great sign that the carrier did not need to raise any money in the float and could instead focus on generating a return for its backers.
“We’re now very focused on serving the domestic Australia market and serving the customers we can win, serving the small business, serving the value corporate, serving the premium leisure segment, those people who really value the product that we put out there,” Mr Emerson said.
“We think that’s going to be very successful going forward and you can already see it in our numbers.
“We’ve changed the whole business model, but what hasn’t changed is our focus on delivering great service for our customers.
“That’s the key bit that stayed the same, as we still deliver great service, we still care about engaging with our customers and making sure they have wonderful flying experiences.
“I think we continue to see very full planes and we feel very good about our forward bookings and where we’re going from here.”
In a separate media release, Virgin Australia chair Peter Warne said the IPO marked the start of an exciting new chapter for Virgin Australia as a publicly listed company.
“Our listing reflects the remarkable work undertaken over the past five years to transform the airline and position it for long-term success,” he said.
“It is great news not just for our people, but for travellers who rely on Virgin Australia being a strong, resilient and competitive airline.”
In conjunction with the listing on the ASX, the Virgin Australia is also offering eligible staff a Take-Off Grant of $3000 in share rights which will convert to ordinary shares after 24 months of ongoing employment.
Virgin Australia currently operates a fleet of 96 Boeing 737s, including eight of the new 737 MAX-8 version.
The airline also wet-leases a number of Airbus A320 and Fokker 100 airliners to service mining contracts in Western Australia and recently commenced a wet-lease arrangement with Qatar Airways to provide long-haul services to Europe via Doha using Qatar-branded Boeing 777-300ERs.
Original Article published by Andrew McLaughlin on Region Canberra.
