The company, headquartered in Brisbane, had a domestic network and short-haul international services, charter and cargo operations.
Robbie Urquhart, Fisher Funds senior portfolio manager for Australian Equities, said it had been a successful debut so far.
“I guess from the vendor’s perspective, they’ll be particularly pleased given that the shares were allocated in the earlier part of June, prior to the unrest and and disruption escalating in the Middle East and oil prices skyrocketing and so on.
“They priced the shares at a substantial discount to comparable airlines in the region being Qantas and Air New Zealand,” Urquhart told the Herald.
He said Virgin Australia did not seem to have ambitions to build a major international network.
The well-priced IPO was the key reason for the success so far today, Urquhart added.
“Maybe secondarily it is a reflection of confidence in the Aussie economy, but the primary driver is just the discount compared to other airlines.”
He said today’s listing was “a great shot in the arm” for the IPO market in Australia.
“It tells you that the IPO window is open for well-structured companies looking to come to market and hopefully it’s a sign of further good news from the IPO calendar perspective in Australia.”
Virgin Australia was sold to American private equity firm Bain Capital in 2020.
“Bain is selling down its Virgin stake at an opportune time,” Morningstar analysts said ahead of the IPO.
“Industry conditions are favourable, pricing power is elevated, and Virgin has reemerged from bankruptcy a better business.”
Virgin Australia has a codeshare agreement with Air New Zealand.
It markets and resells Air New Zealand transtasman flights, excluding Queenstown services, under a VA code.
The two airlines have had a tempestuous relationship in the past decade, reuniting last year after an acrimonious 2018 breakup.
And Virgin Australia, formerly known as Virgin Blue, has a volatile history of its own.
It entered administration in April 2020, owing nearly A$7 billion ($7.56b) to creditors.
Sir Richard Branson’s Virgin Group at that time owned 10% of the airline and the billionaire appealed for Government help.
Singapore Airlines, Etihad Airways of the United Arab Emirates and Chinese conglomerates HNA Group and Hanshan owned most of the rest at that time.
“Virgin was in a feeble position to withstand the Covid-19 pandemic when it hit,” the Australian Financial Review reported.
“It had a mountain of debt, and when flights were grounded, the airline almost immediately collapsed,” the AFR added.
Virgin Australia was sold to Bain two months later and delisted.
In February this year, Qatar Airways was cleared to buy a 25% stake from Bain.
The AFR said today’s listing was a test for the market and for Bain.
Virgin Australia said its scheduled services to Doha, which Qatar Airways operated, were expected to run today with delays as Qatar airspace was re-opened after Iran fired missiles at Al Udeid Air Base.
John Weekes is a business journalist covering aviation and courts. He has previously covered consumer affairs, crime, politics and courts.
