Virgin Australia is gearing up for its initial public offering (IPO) on the Australian Securities Exchange, aiming to raise a significant $685 million. This move will see the airline releasing 236.2 million shares, valuing the company at a substantial $2.32 billion, as detailed in a term sheet reviewed by Reuters.
Following a turbulent period that led to its voluntary administration in April 2020 with debts totaling nearly $7 billion, Virgin Australia underwent a remarkable transformation. Bain Capital swooped in, acquiring the airline for A$700 million, and under the leadership of then CEO Jayne Hrdlicka, the carrier implemented a strategic overhaul. This approach, centered on cost reductions, operational streamlining, and a shift towards the mid-market segment, bore fruit with the airline posting its first profit in over ten years in FY2023, amounting to $129 million in net earnings.
The positive momentum continued into FY2024, with Virgin Australia recording a revenue of $5.4 billion. Notably, in 2024, Qatar Airways entered the scene, acquiring a 25% stake in the airline and announcing plans to introduce long-haul flights from Australia to Doha the following year, with projections indicating a significant boost to the Australian economy.
Against this backdrop, Jayne Hrdlicka announced her departure in 2024, paving the way for Dave Emerson to assume the CEO role in March of the subsequent year. Emerson wasted no time, embarking on a series of investor engagements to drum up support for the upcoming IPO. Additionally, eligible staff were informed of a $3,000 ‘take-off grant’ as part of the relisting process.
The IPO is poised to inject $685 million into the company’s coffers, with each share priced at $2.90. The offering of 236.2 million shares is expected to assign a fully-diluted valuation of $2.32 billion to Virgin Australia. Bain Capital, the current owner, will see its stake diminish to 39.4%, while Qatar Airways will retain its 23% shareholding.
While the IPO date remains undisclosed, reports suggest that Bain Capital has greenlit the listing approximately a month after the June 30 balance date. Notably, Bain Capital has committed to refraining from selling any shares until after the release of the December half-year results, underscoring a strategic long-term vision for the airline’s growth and stability.
In a note to staff, Emerson expressed the airline’s ongoing operational focus amid IPO preparations, highlighting introductory discussions with prospective investors in both local and international markets. This proactive engagement underscores Virgin Australia’s commitment to a successful transition back into the public domain, signaling a new chapter in its corporate journey.
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