Virgin Atlantic IPO: what to know and how to buy shares

When could the Virgin Atlantic IPO take place?

It appears that Virgin Atlantic’s Initial Public Offering (IPO) could finally be about to take off. The launch was first announced all the way back in August 2021, with plans to list by the end of that year.

However, with airline travel decimated by the pandemic, the IPO was delayed — but with the market making a tentative recovery, the time could be ripe for another attempt. If the Virgin Atlantic IPO does launch, it would mark the first time that the airline’s shares would be made available to the public since it was founded in 1984 by Sir Richard Branson.

The company may be in a healthy financial position, but inflation, elevated interest rates, and higher fuel and energy prices have all driven up the cost of business. A cash injection from new shareholders could be helpful.

How to buy Virgin Atlantic shares if the company lists

If Virgin Atlantic do end up listing in the UK, you can buy their shares from £3 commission with us. That's the rate if you've traded 3+ times in the previous calendar month, otherwise our standard fee is £8.

You'll be able to invest in Virgin Atlantic right away on the day of the listing.

1. Do your research on IPOs
2. Open a share dealing account
3. Search for Virgin Atlantic on our share dealing platform
4. Choose the number of shares or amount of money you wish to invest
5. Place your deal

When dealing shares, you own the stock and become a shareholder in the company. You'll profit if the share price rises above the point at which you bought, or potentially from any dividends paid. You could get back less than you put in.

You can also trade the Virgin Atlantic IPO using leverage through a variety of products with us. This means you could gain or lose money quickly and could end up losing more than your initial deposit. This is higher risk and requires thorough risk management.

Read more about IPOs:

• Upcoming IPOs to watch
• How to trade or invest in IPOs
• Trading IPOs on our platform

What will Virgin Atlantic be valued at and what will the share price be?

Virgin Atlantic was hit hard by the pandemic due to its reliance on US-UK flights. With planes grounded all over the world, it raised a £1.2 billion rescue package in September 2020 including £200 million from the founder, and a loan from the American hedge fund Davidson Kempner Capital Management. It then raised circa £300 million more through the sale of aircraft and loans from the wider Virgin group.

This restructuring was implemented on a solvent basis, but only after administrators were waiting outside the door. But in 2021, Virgin Atlantic raised a further £400 million, and had by that time halved its workforce.

However, as the world has reopened for business, the company’s fortunes are reversing. Full-year 2023 saw the airline generate record revenue of some £3.1 billion, an increase of £265 million compared to 2022, driving EBITDA to £352 million.

As a comparator, British Airways owner IAG generated €29.4 billion (£24.5 billion) in revenue in financial year 2023 (FY23) driving its operating profit before exceptional items to €3.5 billion — it has a market capitalisation of circa £10.5 billion. Meanwhile, easyJet generated revenue of £8.2 billion and profit before tax of £455 million, and has a £3.9 billion market capitalisation.

Therefore, you might expect a Virgin Atlantic IPO in the region of £1 billion to £2 billion, especially as losses narrow. However, airline stocks are notoriously difficult to value, and direct comparisons are not as simple as in other sectors. The share price at launch will likely be targeted to compete with IAG at circa 200p per share.

When the IPO was first planned, Virgin Atlantic wished to raise circa £160 million in capital, with the IPO lead by Citi and Barclays.

What is Virgin Atlantic’s business model?

Virgin Atlantic is a British airline which operates domestic, international and cargo flights — alongside package holidays. It’s perhaps most famous for its transatlantic flights, but also operates across Africa, Asia and the Middle East.

Sir Richard Branson’s Virgin Group owns 51% of Virgin Atlantic, with the remaining 49% owned by Delta Air Lines. Virgin Group boasts 60,000 employees working across multiple sectors, including travel, leisure, health, music, telecoms, media, financial services, space exploration and more.

Branson launched Virgin Galactic, the world’s first commercial space enterprise back in 2014 — and also launched Virgin Orbit in 2021 — though this latter enterprise ended in the company being delisted in early 2023.

Should Virgin Atlantic IPO, Branson would almost certainly surrender his position as majority shareholder — however, the airline would need to remain 51% under European control to retain most of its lucrative landing rights — meaning a UK IPO is almost certain.

Virgin typically uses Airbus and Boeing planes, which means negative news at either company (for example, recent turbulence at Boeing) can have a corresponding negative effect. Competitors include British Airways and American Airlines, in addition to its own shareholder Delta Airlines.

In 2023 full-year results, Virgin Atlantic noted a ‘year of sustained customer demand, as the airline capitalised on continued desire for premium leisure air travel and holidays.’ It generated record revenue of £3.1 billion, up £265 million compared to 2022 — driving EBITDA to £352 million.

Meanwhile, EBIT came to £80 million, an improvement on 2019 (pre-pandemic) results, and arguably a milestone on the path to continued profitability, with the airline expecting to return to profitability in 2024. Losses before tax and exceptional items fell to £139 million from £206 million the year before.

The business ended 2023 with a cash position of £406 million, after refinancing £41 million and paying down £98 million of debt. Virgin Atlantic carried some 5.3 million passengers last year, with a load factor of 77%; meanwhile ASKs (a key airline passenger capacity metric) rose by 16% with 23,720 sectors flown on 41 aircraft.

Passengers generated revenue of £2.4 billion, the highest ever for the airline despite slower corporate travel demand. The Holidays segment carried 231,000 holidaymakers, while the cargo department delivered revenue of £196 million derived from carrying 158,000 tonnes of cargo.

Virgin Atlantic now boasts a flight completion factor of 99.7% — a punctuality score at Heathrow Airport ten points ahead of industry average — and for a seventh consecutive year, it has been recognised as the UK’s only five star airline by air travel experience network APEX.

And in November 2023, the airline operated Flight100, the world’s first transatlantic flight on 100% sustainable aviation fuel. Accordingly, Virgin Atlantic was awarded a gold rating by the Centre for Aviation in its 2023 Airline Sustainability Benchmarking.

Chief executive officer (CEO) Shai Wess recently noted that ‘At the midpoint of Velocityx, our four-year strategic plan, and as we gear up to mark 40 years of flying in June, our commitment and belief in our vision of becoming most loved travel company and sustainably profitable is stronger than ever. 2024 is the turning point for Virgin Atlantic.’

Virgin Atlantic related investments

While you wait for the Virgin Atlantic IPO, there are plenty of similar investing opportunities. Popular choices include competitors such as FTSE 100-listed IAG (owner of British Airways) and NASDAQ listed American Airlines, or smaller operators like easyJet and Ryanair.

For investors seeking the benefits of diversification but with an airline focus, perhaps the most common choice is the US Global Jets ETF (JETS), which allocates three quarters of its portfolio to airlines and aviation industry businesses. This ETF has a middling expense fee of 0.6% and over $1 billion in assets under management. With a US focus, top holdings including United Airlines, Delta Airlines, and American Airlines.

Virgin Atlantic IPO summed up

• Virgin Atlantic’s Initial Public Offering may launch soon as the airline moves to hoped-for profitability in 2024
• It generated record revenue of £3.1 billion in 2023 and is targeting further growth
• An IPO may be in the £1 billion to £2 billion range, raising circa £160 million in capital
• Virgin Atlantic carried some 5.3 million passengers last year
• The company enjoys a trusted brand which could translate into a popular IPO