Virgin’s non-deal IPO roadshow launches on Monday

Virgin Australia is expected to be floated on the ASX this year. Picture: AFP

Virgin Australia will begin meetings for the early stages of its initial public offering campaign from Monday, say sources.

But those hoping for detailed discussions over price or earnings could be disappointed, as the initial presentations are designed to introduce the airline’s new chief executive, Dave Emerson, and offer fund managers a refresher on the business.

Although there’s to be no discussion on price, there’s an expectation growing in the market that Virgin’s private equity owner, Bain Capital, is likely to put a reasonable valuation on the business as it’s already making its money on the investment.

Last time there were suggestions that Bain could be looking at a valuation higher than the country’s national listed carrier, Qantas.

But that was when Qantas was trading at three to four times its earnings before interest, tax, depreciation and amortisation; now it is close to five or six times and the carrier is thriving following the demise of regional airline Rex which had been competing on major city routes.

DataRoom first revealed last week that Bain Capital had revived its IPO campaign for Virgin after testing the waters for a deal in 2023.

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 during 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.

The non-deal roadshow comes with expectations that Virgin will make efforts to hit the boards this year.

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

The plan in 2023 had been for Virgin Australia to have about $1.97bn in borrowings and a $3bn-odd valuation, sources said at the time.

However, it called off the deal due to weak market conditions.

Virgin also last year sold a 25 per cent stake in the business to Middle Eastern carrier Qatar Airways 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 taking about 19 million passengers and employing 7000 staff.

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

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

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