Virgin Australia eyes upcoming ASX IPO: 'Doing at least as well' as Qantas

Virgin shares were dramatically wiped from the market in 2020. Could they return as soon as next year?

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Key points

  • Virgin Australia shareholders were dealt a major blow in the midst of the COVID-19 pandemic when the airline fell into administration. It was ultimately bought by private capital, leaving investors high and dry
  • But there could be hope on the horizon for ASX airline fans. The company's CEO has reportedly flagged its return to the ASX, with its IPO potentially going ahead as soon as next year
  • Such optimism comes after years in which the airline worked to regain its market share – its domestic routes are now said to be at least as profitable as those of Qantas

One of the ASX's most renowned COVID-19 victims might be getting ready to launch back onto the market, flagging an upcoming initial public offering (IPO).

Virgin Australia deserted shareholders after it fell into the hands of administrators in 2020. It was ultimately snapped up by Bain Capital. Now, CEO Jayne Hrdlicka has told The Australian the airline has scrambled out of its despair to perform "at least as well" as Qantas Airways Limited (ASX: QAN)'s domestic business in 2022.

Let's take a closer look at the latest insight into the previously battered Australian airline.

Virgin Australia hints at upcoming ASX IPO

Wounded former Virgin shareholders could have another chance with the airline in the near future. Its CEO has hinted Virgin could undergo an IPO as soon as 2023.

Speaking on the potential of an upcoming IPO and ASX float, the airline's boss told The Australian:

It's not outside the realm of possibility.

It's a lot faster than we thought it would be and we are flattered that this soon after becoming a new company and starting from scratch we're in a position where we're having these conversations, because it's extraordinary.

Virgin Australia returned from administration in November 2020 with a 22% share in Australia's domestic passenger market. In the years since, the airline has worked to regain its strength.

The Australian Competition and Consumer Commission's latest report on airline competition found Virgin held between 31% and 35% of the market between December 2021 and April 2022.

Meanwhile, Qantas and its budget brand Jetstar respectively had 37% and 28% of the market in April.

Virgin also held the largest market share – 36% – on routes between larger cities in that time.

Hrdlicka reportedly believes Virgin's domestic routes' profitability is "doing at least as well" as Qantas' now.

Though, she told the publication the airline still carries $1.8 billion of debt. "The debt portfolio needs reviewing and we need to be able to fund growth," Hrdlicka said, courtesy of The Australian.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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