Virgin Atlantic plans London stock market listing

Sir Richard Branson’s Virgin Atlantic Airways is planning to list in London in a bid to take advantage of investor expectations of a rapid recovery in international travel.

The UK-based airline has been presenting to fund managers about a listing on the London Stock Exchange as early as autumn, according to a person familiar with the matter.

The potential listing would mark the first time that Virgin Atlantic offers its shares to the public since its launch in 1984 and it would align the British airline with its publicly traded competitors such as British Airways owner IAG, American Airlines and Cathay Pacific.

The company is aiming to bolster its balance sheet in case of any further unforeseen events that bring operations to a halt, after raising more than £1.5bn of financial support since last September to withstand the pandemic. It comes as a recovery in both business and holiday travel gathers momentum.

Bankers from Citi and Barclays have been appointed to lead the IPO, which was first reported by Sky News. Virgin Atlantic said “we’re not commenting on speculation”.

Branson would likely lose his status as majority shareholder, held through the British billionaire’s Virgin Group. The remaining 49 per cent of the company is owned by Delta Air Lines.

Border shutdowns during the Covid-19 pandemic have battered the airline industry, with Virgin Atlantic hit particularly hard by its reliance on transatlantic flights.

Branson made pleas for state aid at the depths of the pandemic last year but unlike British Airways and easyJet, it did not access UK government funds after the government rebuffed an initial request for a bailout.

The airline was instead supported by shareholders, including Branson’s Virgin Group and US hedge fund Davidson Kempner Capital Management.

It has also been supported by a boom in its cargo business, but the group’s chief executive Shai Weiss warned in April of a permanent reduction in lucrative business travel.

Airlines such as Ryanair are now posturing aggressively to take market share as travellers set off on holidays and business trips once again.

Virgin Atlantic has shaped itself up to list after undergoing a sweeping restructuring over the past year. It has cut more than £300m in annual costs by slashing its headcount by almost half to 5,700 people, exiting Gatwick to consolidate its operations at other major airports and retiring its Boeing 747 jumbo jets.

Bookings on its US-UK route have jumped 150 per cent since last Monday, when people travelling to England from the US and most European countries no longer had to quarantine if they had been fully vaccinated against coronavirus.

The industry is hoping for another uplift if the Biden administration loosens travel restrictions for arrivals from the UK and Europe.

As well as shaping the airline up for the post-pandemic take off in air travel, access to a larger pool of capital would help the airline to endure future shocks that may cause travel demand to plummet.