Richard Branson’s Virgin Atlantic plans stock market listing

Sir Richard Branson

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.

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.