Virgin Australia board mulls taking the airline private

Portrait of Virgin Australia chair Elizabeth Bryan. Thursday 2nd November 2017. Photograph by James Brickwood. AFR NEWS 171102
Portrait of Virgin Australia chair Elizabeth Bryan. Thursday 2nd November 2017. Photograph by James Brickwood. AFR NEWS 171102

Virgin Australia's board has revealed it has been considering mopping up the minority shareholders on its register and making the airline a private company.

The company's chair Elizabeth Bryan said on Wednesday that the board had discussed privatising the company, but that there was "no outcome to report to the market at this stage".

International carriers Etihad Airways, Singapore Airlines, HNA Aviation Group and Nanshan each own about 20 per cent of Virgin Australia, while Richard Branson's Virgin Group owns another 10 per cent.

That leaves less than 10 per cent of the company's shares traded freely on the stockmarket, which has led to speculation Virgin could buy back these remaining shares - worth about $175 million at the current share price - and take the company private.

Ms Bryan told investors at Virgin's annual general meeting in Brisbane that she was aware of what the small free float meant for minority shareholders, and that she had a responsibility to insure their interests were represented on the board.

"We have a responsibility to ensure that we act in the best interests of all shareholders and in the long-term interest of the company," she said.

"As part of fulfilling this responsibility, the board has held discussions about privatisation, however there is no outcome to report to the market at this stage."

The comments, and a positive first-quarter trading update, sent Virgin's shares up 7.7 per cent to 21?? shortly after the AGM commenced. The stock has rallied 13.5 per cent over the past month.

Addressing the meeting, Virgin's chief executive John Borghetti said the company ran at an underlying profit before tax of about $14.5 million in the first quarter of the 2018 financial year, up from a $3.6 million loss in the same period last year.

That came off the back of a 5.7 per cent increase in total revenue, improved domestic passenger numbers, and an 8.8 per cent improvement in revenue generated for every seat flown.

Mr Borghetti said he expected the positive performance to continue, and saw Virgin's underlying performance improving year-on-year in the next two quarters, which would mark four consecutive quarters of improvement.

The airline reported a smaller than expected $185 million loss last year, the first of its three-year turnaround plan.

This story Virgin Australia board mulls taking the airline private first appeared on The Sydney Morning Herald.