Virgin Australia shares surged 11.4% in their trading debut on Tuesday, lifting the airline’s market capitalization to A$2.58 billion ($1.7 billion). The successful debut has raised hopes among dealmakers for a revival of Australia’s subdued listings market. The airline sold 236.2 million shares at A$2.90 each, valuing it at A$2.32 billion on a fully diluted basis.
The stock closed its debut session at A$3.23, outpacing a 1.1% gain in the Australian benchmark S&P/ASX200. Virgin Australia’s CEO Dave Emerson, who rang the bell at the Australian Securities Exchange in Sydney, said he was not overly concerned about the impact of the conflict in the Middle East due to the airline’s focus on the Australian market, which constitutes 90% of its business. “With the potential de-escalation in the Middle East, that sort of puts some downward pressure on the oil price, which is slightly positive as well for the airline,” said Joseph Koh, a portfolio manager at Blackwattle Investment Partners which bought Virgin stock.
The airline has primarily operated as a domestic carrier under Bain Capital’s ownership but resumed long-haul flights to Doha through a lease agreement with Qatar Airways. Shares of Qantas, the main rival to Virgin Australia, also closed 2.4% higher on Tuesday following a drop in global oil prices. Virgin disclosed in an exchange filing that it has hedged 98% of its anticipated fuel usage in Brent crude oil at a cap of $70 per barrel for the first half of 2026 and 86% in the second half.
Virgin Australia’s impressive IPO debut
Koh remarked that if competition remains rational, a rise in oil prices would be passed onto end users. Virgin was delisted in 2020 after Bain Capital rescued it from administration.
Bain bought Virgin for A$3.5 billion, including liabilities, but will see its stake reduced to 39.4% from about 70%. Qatar Airways, which recently bought into the airline, will retain 23%, according to the IPO prospectus. The IPO attracted strong demand from institutional investors, with indicative orders surpassing the offering size during bookbuilding.
Fund managers said the shares being priced at an almost 30% discount to those of Qantas were an incentive to buy. As of March, Virgin held a domestic flight market share of 34.4% compared to Qantas’ 37.5%, according to the Australian Competition and Consumer Commission. The IPO is set to deliver a fee windfall for investment banks Goldman Sachs, UBS, and Barrenjoey, with 2% of proceeds paid to underwriters, and an option for a further 1% incentive fee.
“A successful Virgin debut will help revive Australia’s subdued IPO market,” said Jun Bei Liu, founder of Ten Cap which is a Virgin cornerstone investor. Retirement resort group GemLife is due to start trading on July 3 after raising A$750 million in its IPO this month.
