Virgin Atlantic is reportedly coming to the London Stock Exchange in a move that will see Sir Richard Branson surrender his position as 51% shareholder.
Branson’s lower flying aviation business, first launched in 1984, is reportedly being positioned for an IPO that could net £160mln for the airline, according to Sky News.
Virgin Atlantic over the weekend pitched City institutions with management presentations which, Sky said, received positive feedback that tees up a potential autumn share sale.
Sky noted that the airline had hired Citigroup and Barclays bankers to run the proposed listing.
Branson holds 51% of Virgin Atlantic shares alongside US airline Delta, which has the other 49%, and the public share sale is expected to dilute the British entrepreneur’s stake. Earlier this year the Virgin billionaire personally lent the airline £100mln to stay afloat, after an unsuccessful plea for a government bailout in the pandemic.
It also comes as Branson has focused on ‘space travel’ (high altitude flight) firm Virgin Galactic which last month flew its first fully crewed voyage to ‘the edge of space’ and recently priced seats at US$450,000 as it opened sales for commercial flights to start in 2022.
Analysts at stockbroker Hargreaves Lansdown, in a note, said that investors shouldn’t be surprised by Virgin Atlantic IPO stories but described it as a “hail Mary” move by Branson.
“Like all its peers, the airline’s been battered by the pandemic - posting a £659m loss last year,” analyst Laura Hoy said.
“The business is in serious need of cash and selling shares is one way to fill the coffers.”
“This is a bit of a strange time to be selling airline shares, though. The sector has been beaten down and pandemic-related uncertainty still lingers. That’s particularly true for long-haul airlines that will be last to see traffic recover.”
Hoy highlighted that British Airways owner IAG isn’t expecting passenger numbers will return to pre-pandemic levels until 2023 at the earliest.
“Now isn’t a great time to be an airline, particularly one that relies on long-haul,” she added.
“So far, reports suggest that institutional investors privy to the details have had a ‘positive’ reaction, but we think the wider market might be less forgiving.“