Bain boss says Virgin float delayed amid volatile market

The private equity group executive has told airline staff that IPO markets are ‘effectively closed’ but a listing was likely to happen ‘within the next two of three years’.

Virgin Australia chief executive Jayne Hrdlicka had in June told The Australian that a float may occur as early as 2023. Picture: Lyndon Mechielsen

Bain managing director Ryan Cotton has told a confidential Virgin Australia staff briefing that the airline’s planned ASX float was being hampered by volatile financial conditions.

Mr Cotton, who is also the airline’s chairman, flew in to Australia to speak with management and on Wednesday told staff that “IPO markets are effectively closed”.

Despite a “really strong quarter”, the timing of a float was outside Bain’s control, he added. “It will be unlikely to happen this year, but within the next two or three years, that’s our goal,” Mr Cotton told staff. “For the residual part of this year is nearly inaccessible for reasons that have nothing to do with us but the state of financial markets.”

Virgin Australia chief executive Jayne Hrdlicka had in June told The Australian that a float may occur as early as 2023.

“We’ve put up a really great quarter which is awesome,” Mr Cotton said. “We need to some more really strong quarters. If you went back two years ago and said this is where we would be today we’d all be deliriously happy we are making money again and that we are operating at really strong scale again”.

Sources said the airline’s senior executives had begun discussions with investment banks.

This is the second time the Boston-based chairman has addressed staff since Bain purchased Virgin from administration in 2020.

It comes as Virgin also prepares to tell frontline staff as soon as Thursday they will receive an additional bonus of 2 per cent of their salaries, with another 4 per cent possible and the end of full year 2023. Office staff will also hear news of their bonuses as soon as tomorrow.

Virgin is believed to have moved to a profit in Easter and will now be looking at ways to retain its existing staff in a tight jobs market and also attract new ones.

The airline on Thursday announced it had hired an additional 2000 staff over the past two years since its collapse, taking employee numbers to just over 7000.

Bain, which purchased Virgin in a $3.5bn deal in 2020, confirmed to The Australian in December that investment banks had approached the private equity group “with proposals to relist Virgin Australia on the ASX in 2022”.

Bain has significantly restructured Virgin, including replacing the airline’s well-regarded chief executive Paul Scurrah with Ms Hrdlicka, a former Qantas and Jetstar executive. The company has also expanded its fleet.

Virgin’s last financial reports, to the year ending June 30, showed the airline posted an underlying loss of $76.8m after slashing costs by restructuring and making significant numbers of staff redundant.

However, that result was in the midst of the Covid-19 pandemic. Since the start of this year, demand for travel has risen significantly.

While Virgin has managed to avoid the baggage issue that’s faced its bigger rival both airlines have suffered brand damage due to angry customers failing to reach destinations.

Qantas will release its profit result on Thursday and is expected to detail more information about how it will try win back customer support.