Virgin Australia CEO to meet investors ahead of IPO plans

Virgin Australia was purchased by Bain Capital following its collapse amid the global pandemic. Picture: Nigel Love

Virgin Australia’s management team has started booking in meetings with prospective investors ahead of plans for an initial public offering.

The meetings are to introduce newly appointed chief executive Dave Emerson. The plans were revealed online by this column.

The understanding is that the meetings are an informal introduction to the airline executive, rather than the start of any formal process for a listing.

However, expectations are mounting that Virgin will make efforts to hit the boards this year.

It comes after it tested appetite for an initial public offering in 2023 but opted against the move.

Working in Virgin’s favour is the fact that Qantas shares are trading at high levels.

Mr Emerson was named as the replacement for Jayne Hrdlicka this month.

He was Virgin’s chief commercial officer, reporting to Ms Hrdlicka, who took the helm of the airline after it was recapitalised by Bain Capital amid the pandemic in 2020.

It paid $700m and took on its $5.15bn of debt.

Ms Hrdlicka stood down after the death of her husband, and earlier Paul Jones was touted as her replacement.

Barrenjoey, Goldman Sachs and UBS are working on a potential listing of Virgin Australia.

The plan had been for Virgin Australia to have about $1.97bn in borrowings, with a $3bn-odd valuation.

However, it called off the deal amid weak market conditions.

Virgin has been expected to move forward with its float plans after appointing a new boss and selling a 25 per cent stake in the business to Middle Eastern carrier Qatar, in a deal it first started talking about in 2023, as flagged by this column, and for which it has now secured approval.

The price paid was thought to be about $750m, which would put a valuation of about $3bn on the carrier.

Virgin Australia is the country’s second-largest carrier with 19 million passengers and 7000 staff.

The airline also has a domestic network of 66 routes and a targeted short haul international ­network.

A valuable part of Virgin is its loyalty program – it is Australia’s third largest, with 11 million members and 80 partnerships.

In 2023, it was generating about $400m in annual income.

Shares in Qantas have gained more than 75 per cent in the past year and are currently trading at $9.16, equating to 7.8 times its forecast annual net profit.

Helping both Virgin and Qantas has been the collapse of regional carrier Rex, which had entered metropolitan markets in a quest to compete with them on major routes.