Virgin America launches stock market flotation

Tim Wallace
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RICHARD Branson’s US airline Virgin America is going public, seven years after the tycoon and his iconic brand launched the firm.

The flotation comes almost immediately after the airline made it into the black – it posted a $10.5m (£6.18m) profit for 2013, its first profitable year.

The profit was made off revenues of $1.42bn.

And it comes in the midst of a flotation boom – 25 initial public offerings (IPO) are expected to price this week, according to Dealogic, making it the busiest week since 7 August 2000.

No details of the scale of the airline’s IPO have been published, either in terms of the capital to be raised or the proportion of shares being sold.

Branson owns a 22 per cent stake in the com­pany, part­ly be­cause US laws re­strict foreigners to hold­ing a maximum of 25 per cent of a domestic airline.

Most of the remainder is owned by hedge fund Cyrus Capital Partners, through its VAI Partners unit, which has a 76.1 per cent stake in the firm.

Virgin Airlines has hired Barclays and Deutsche Bank as lead underwriters.

The airline is based in California, and most of its flights are mainly between Los Angeles and San Francisco.

However, its full list of flights covers 22 cities across the US and Mexico.

Virgin Airlines’ announcement of its IPO filing with the Securit­ies and Exchanges commission boasts that the firm is “known for its upscale service and low fares”.

Virgin’s brand covers other airlines, such as Virgin Atlantic, in which Branson owns a larger stake.

■ The Virgin brand’s most recent experiment in public listings performed well – Virgin Media was bought last year by Liberty Global for $24bn.

■ But that was not the result of a Virgin flotation. Virgin Media was formed out of a series of mergers with NTL, Telewest and Virgin Mobile, merging into a listed entity.

■ Richard Branson’s own previous flotation was that of the Virgin music business in the 1980s.

■ He hoped to raise funds and perform strongly as a public company, but the City was less keen on his personality-driven business style, and Branson took the firm private again.

■ He owns around half of Virgin Money, the bank which has grown in part by buying the so-called “good bank” part of Northern Rock.

■ Branson is expected to float the lender, possibly as soon as next year, in his next planned deal with City stock market investors.

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