British airline Virgin Atlantic is considering raising funds on the London Stock Exchange in an attempt to shore up its balance sheet.
The listing, expected to be announced in the fall, is likely to see billionaire Sir Richard Branson give up overall control of the business. His Virgin Group currently owns 51% of the airline and US-based Delta Air Lines owns the remainder.
Like most airlines around the world, the firm has been hit by the Covid-19 pandemic. In April, it reported a pre-tax loss of £ 659 million for 2020 after passenger numbers fell by 80%.
The group also cut costs, cutting 41% of its workforce and retiring some older aircraft early.
That came after a £ 1.2 billion bailout deal last summer, including £ 170 million in loans from the Davidson Kempner hedge fund, to keep the business running after months with no scheduled flights.
Branson, who founded the airline in 1984, injected £ 200 million of his own money, raised by selling a stake in the Virgin Galactic space division, while Virgin Group and Delta deferred payments totaling £ 400 million from his company. transatlantic joint.
At the time, the group said it expected to make a profit again in 2022. It said the deal was based on a worst-case forecast and that it did not expect to have to raise new capital if international travel approached previous normal levels. to the crisis. by 2023.
The airline’s position was seen as one of the most precarious of the large airlines operating outside of the UK, having rarely made a profit in recent years.
The listing, first reported by Sky News, could prove to be a misleading tactic as the share prices of airlines such as IAG and easyJet, which owns British Airways, remain significantly below pre-Covid levels. With international travel restrictions still in place in many countries due to the pandemic, investors remain concerned about how long it will take for the industry to recover.
A key problem for Virgin Atlantic is that the US still has a travel ban for the vast majority of British citizens and has advised its own population to stay home.
There is also the possibility that you will 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 advisers, including Citi and Barclays, have been reaching out to major investors about a possible IPO in recent weeks and financial groups have responded positively to the idea.
Virgin Atlantic said it would not comment on the speculation.