Virgin Australia’s IPO Plans Derailed by CEO Departure
Virgin Australia’s aspirations for an initial public offering (IPO) in the foreseeable future have been effectively dashed following the unexpected resignation of CEO Jayne Hrdlicka. The Australian business press suggests that this development has significantly altered the strategic direction of the airline, owned by Bain Capital. Initial plans for a partial floatation of Australia’s second-largest airline on the stock market last year have been put on hold, with Bain Capital now considering a trade sale as a more viable option.
Bain Capital took ownership of Virgin Australia in late 2020, acquiring the airline for AUD3.5 billion (USD2.28 billion), liabilities included, after it had filed for voluntary administration earlier that year. Despite returning to profitability, Virgin Australia has faced challenges in expanding its market share against the Qantas Group and has encountered notable reliability issues.
The airline announced on February 20, 2024, that Hrdlicka was stepping down from her role as CEO, a move that was later reported to be a decision influenced by Bain Capital’s dissatisfaction with her performance. Concerns cited included her inability to leverage ongoing issues at competitor Qantas in 2023 and her extensive involvement with Tennis Australia, which reportedly detracted from her focus on Virgin Australia. Hrdlicka was informed of the decision to terminate her position on February 19.
The failure of initial IPO plans can be traced back to last April when investor roadshows were suddenly canceled, coinciding with Hrdlicka’s personal leave following her husband’s death. Despite this setback, Bain Capital has already seen substantial returns from its investment in Virgin Australia, having recouped almost AUD730 million (USD477 million) in May through a capital return to shareholders, equating to the initial cash investment for the airline’s acquisition.
The departure of the CEO has solidified the position that an IPO is off the table for the short to medium term. While Virgin Australia reported an AUD129.1 million (USD84.3 million) profit for the fiscal year ending June 30, 2023, operational challenges and market sentiment have not favored an immediate move towards going public. Reports suggest Bain Capital is now exploring a trade sale as a profitable alternative for exiting its investment in the airline. Bain Capital has not commented on its future intentions for Virgin Australia.
In the interim, Virgin Australia has engaged executive search firm Korn Ferry to identify a suitable successor for the CEO position, signaling the beginning of a new chapter in the airline’s leadership and strategic direction.