Virgin Australia shares soar 8.3% in $439 million IPO debut

VirginAustraliasharesrallied8.3%on Tuesday, after its 685million Australian dollar($439million) initial public offering, a transaction dealmakers hope will revive a subdued listings market.

The airline sold 236.2millionsharesat AU$2.90 each, valuing it at AU$2.32 billion on a fully diluted basis.

The stock began trading at AU$3.14, outpacing a 1.2% gain in theAustralian benchmark S&P/ASX200.

Virgin’s listing comes amid operational disruptions, with the airline diverting two Qatar-bound flights to India and Oman, according to flight tracking website FlightRadar24. Qatar temporarily closed its airspace ahead of Iranlaunchingmissiles at a U.S. base in the state.Virgindid not immediately respond to a request for comment from Reuters.

Sharesof Qantas, the main rival toVirginAustralia, climbed 4% on Tuesday following a 7% drop in global oilpricesthe previous day, after Iran took no action to disrupt oil and gas tanker traffic through the Strait of Hormuz.

Virgindisclosed 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. It has hedged 86% of its anticipated fuel usage at the same price in the second half.

“Four years ago, with the help of Bain Capital, we set out to transformVirgininto a simpler, more focused company with a clear view on how are we going to serve our customers and how are we going to win in theAustralian domestic market,” Dave Emerson,VirginAustraliachief executive, said at a listing ceremony in Sydney.

Virgin, which isAustralia’s second-largest airline by market share after Qantas Airways, was delisted in 2020 after private equity giant Bain Capital rescued it from administration.

Bain, which boughtVirginfor AU$3.5 billion including liabilities, will see its stake reduced to 39.4% from about 70%, while Qatar Airways, which recently bought into the airline, will retain 23%, theIPOprospectus showed.

TheIPOattracted strong demand, with institutional investors lodging indicative orders surpassing the offering size during book building, according to a term sheet reviewed by Reuters.

Thesharesbeing priced at an almost 30% discount to those of Qantas were an incentive to buy, fund managers said.

Virginhas a domestic flight market share of 34.4% as of March versus Qantas’ 37.5%, a report from theAustralian Competition and Consumer Commission showed.

“From our perspective, theIPOpricing offered an attractive discount to Qantas, allowing room for shareholders to benefit fromVirgin’s operational improvement targets and structural tailwinds like the rise of premium ticket demand,” said Jun Bei Liu, founder of Ten Cap which is aVirgincornerstone investor.

“Virgin’s domestic focus and hedged fuel position provide resilience amid geopolitical and commodity market risks.”

Virginpared back its international business under Bain’s ownership. It has resumed long-haul flights to Doha through a lease agreement with state-owned Qatar Airways.