Speculation about a possible Virgin Atlantic IPO takes off

Ricahrd Branson

There are an increasing number of reports this week that Virgin Atlantic is planning on floating on the London Stock Exchange (LSE) by the end of the year.

Virgin Atlantic is reportedly in talks with institutional investors about launching an IPO, however, the company may need a greater recovery for the leisure and tourism sector before proceeding.

Shai Weiss, CEO, Virgin Atlantic said: “The UK is already falling behind the US and EU and a continued overly cautious approach towards international travel will further impact economic recovery and the 500,000 UK jobs that are at stake. We urge the UK Government to move the US to the UK’s ‘Green list’ and for the exemption from self-isolation to be extended to all fully vaccinated passengers with WHO-recognised vaccines, beginning with the US and EU. Our proof-of-concept trial demonstrates our readiness as an industry to rapidly operationalise an expanded Amber policy for fully vaccinated travellers, and work with Government and authorities to ensure it is smoothly implemented at pace, supporting the reopening of the Transatlantic corridor.”

This follows a tough pandemic for the firm – like many within the industry.

Virgin Atlantic reported revenue figures of £868m – down from £2.9bn in 2019 – marking a pre-tax loss of £659m before tax. The results reflect the toughest year in the airline’s 36-year history and the immense challenges that the airline industry has faced due to the Covid-19 pandemic.

The airline is currently 51% owned by Founder, Richard Branston’s Virgin Group, with the remainder held by US-based Delta Airlines.

Sky News have reported that Barclays and Citi have been appointed by the Virgin to manage the IPO.

Laura Hoy, Equity Analyst at Hargreaves Lansdown stated: “Richard Branson isn’t known for making small conservative moves, so speculation about a Virgin Atlantic offering on the London Stock Exchange shouldn’t be shocking. Like all its peers, the airline’s been battered by the pandemic—posting a £659m loss last year.

“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. British Airways owner IAG noted that it doesn’t expect to see passenger numbers rise to pre-pandemic levels until 2023 at the earliest.

“Ultimately, this listing looks like a bit of a hail-Mary from Branson, who’s firm recently lent the airline £100m to help it through the tough times. Now isn’t a great time to be an airline, particularly one that relies on long-haul. 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.”