business forward

Richard Branson’s Virgin Atlantic plans stock market listing - The Guardian

The British airline Virgin Atlantic is considering raising funds on the London Stock Exchange in an attempt to shore up its balance sheet.

The listing, which is expected to be announced in the autumn, is likely to see the billionaire Sir Richard Branson relinquish overall control of the business. His Virgin Group currently owns 51% of the airline with the US-based Delta Air Lines owning the rest.

Like most airlines around the world, the firm has been hammered by the Covid-19 pandemic. In April it reported a £659m pretax loss for 2020 after passenger numbers dropped by 80%.

The group also cut costs, shedding 41% of its workforce and retiring some older aircraft early.

That came after a £1.2bn rescue deal last summer, including £170m in loans from the Davidson Kempner hedge fund, to keep the business going after months without scheduled flights.

Branson, who founded the airline in 1984, injected £200m of his own money, raised through selling off a stake in the space division Virgin Galactic, while Virgin Group and Delta deferred payments totalling about £400m from their transatlantic joint venture.

At the time, the group said it hoped to return to profit in 2022. It said that the deal was based on a worst-case forecast, and did not expect to have to raise fresh capital if international travel approached normal, pre-crisis levels by 2023.

The airline’s position was seen as one of the most precarious of the big airlines operating out of the UK, as it had rarely turned a profit in recent years.

The listing, first reported by Sky News, might prove a tricky gambit as the share prices of airlines such British Airways-owner IAG and easyJet remain significantly down on pre-Covid levels. With international travel restrictions still in place in many countries due the pandemic investors remain concerned about how long it will take the industry to recover.

A key problem for Virgin Atlantic is that the US still has a travel ban in place for the vast majority of British nationals and has advised its own populace to stay at home.

Sign up to the daily Business Today email or follow Guardian Business on Twitter at @BusinessDesk

There is also potential for it to lose customers to a new low-cost competitor as JetBlue plans to launch flights to New York this month.

However, Sky reported that Virgin Atlantic’s advisers, including Citi and Barclays, have been approaching major investors about a possible flotation in recent weeks and the finance groups had responded positively to the idea.

Virgin Atlantic said it would not comment on the speculation.

… as you're joining us from France, we have a small favour to ask. Tens of millions have placed their trust in the Guardian’s high-impact journalism since we started publishing 200 years ago, turning to us in moments of crisis, uncertainty, solidarity and hope. More than 1.5 million readers, from 180 countries, have recently taken the step to support us financially – keeping us open to all, and fiercely independent.

With no shareholders or billionaire owner, we can set our own agenda and provide trustworthy journalism that’s free from commercial and political influence, offering a counterweight to the spread of misinformation. When it’s never mattered more, we can investigate and challenge without fear or favour.

Unlike many others, Guardian journalism is available for everyone to read, regardless of what they can afford to pay. We do this because we believe in information equality. Greater numbers of people can keep track of global events, understand their impact on people and communities, and become inspired to take meaningful action.

We aim to offer readers a comprehensive, international perspective on critical events shaping our world – from the Black Lives Matter movement, to the new American administration, Brexit, and the world's slow emergence from a global pandemic. We are committed to upholding our reputation for urgent, powerful reporting on the climate emergency, and made the decision to reject advertising from fossil fuel companies, divest from the oil and gas industries, and set a course to achieve net zero emissions by 2030.

If there were ever a time to join us, it is now. Every contribution, however big or small, powers our journalism and sustains our future. Support the Guardian from as little as €1 – and it only takes a minute. Thank you.

Accepted payment methods: Visa, Mastercard, American Express and PayPal