Virgin Australia’s IPO isn’t going to happen until the new calendar year, but local investors already have their Christmas wish-lists ready.
Local fund managers seem to agree on five things they want from Virgin Australia boss Jayne Hrdlicka when it comes to the airline’sFirstly, they want the IPO, and more like it, to help rebuild the Australian equity market, which they say has been depleted by a cheap debt-fuelled wave of private equity-led merger and acquisition activity.
Fourth, they want Virgin’s financial sponsors at Bain Capital to be locked up in the stock for a period of time.“Before you even consider the fact it’s an airline, one of the pervasive issues is the level of overhang, or sense of anticipation that the remainder is coming when it comes to some of these private-equity sell downs, like Latitude Financial or Pepper Money,” says one fund manager.
Adding to Qantas’ woes on September 25 was new chief executive Vanessa Hudson’s admission that fuel prices have risen by 30 per cent during the current half and the airline will absorb the impact until the end of the year, weighing heavily on the record margins flagged by Joyce just four months earlier.
Skyrocketing jet fuel costs and higher wages are creating headwinds for aviation globally. And it is into this backdrop that Virgin’s float appears to have stalled and will now be pushed back into 2024. Virgin lost money for eight years leading into the COVID-19 pandemic and will need to paint a very different picture for the future.This will not be any easier given the challenges of rising fuel costs and a falling Australian dollar, as Virgin prepares to take delivery of new Boeing 737 MAX planes that are denominated in US dollars.
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