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LONDON, Aug 9 (Reuters) - Virgin Atlantic, the transatlantic
airline founded by billionaire Richard Branson, may need a
deeper travel recovery to take hold before it can secure
investor backing for its plans to float on the London Stock
Exchange, analysts said.
Sky News first reported Virgin's plans for an initial public
offering on Saturday, saying an autumn announcement was likely.
Barclays and Citi have been appointed by the
airline to handle the float, a source familiar with the
situation said.
But analysts said Virgin, which has declined to comment on
the IPO plans, may need to wait longer.
"This is a bit of a strange time to be selling airline
shares," said Hargreaves Lansdown equity analyst Laura Hoy.
Like most airlines, Virgin has been brought to its knees by
the pandemic, with the carrier even more severely affected than
rival British Airways due to its focus on Britain-U.S.
routes, which still remain partially closed.
Branson owns 51% of Virgin Atlantic through his Virgin Group
and Delta Air Lines Inc owns the rest.
Virgin has survived the pandemic thanks to a 1.5 billion
pound ($2.08 billion) rescue between Sept. 2020 and March 2021
and axing around half its staff to cut costs.
The company now wants to bring in new investment to boost
its finances as the outlook for travel brightens.
Fully vaccinated American citizens are now able to fly to
Britain without the need to quarantine, but most Britons cannot
freely travel to the United States.
"The pitch to investors will clearly be the timing of the
return to normalised demand and business traffic, with this
challenged by concerns over the longevity of government-imposed
restrictions," analysts at Goodbody said in a note. "That debate
will be central if the listing is launched as early as the
autumn."
There is no clarity on when the United States will reverse
its ban on UK arrivals, and, globally passenger numbers are not
expected to return to pre-pandemic levels until 2023, industry
body IATA has said.
Virgin has pointed to a pick-up in demand. The airline has
said bookings from New York to London surged by nearly 250% in
the week when Britain changed rules for U.S. arrivals, and said
it was also helped by Caribbean routes and cargo.
But the group's track record on profitability could cause
concerns for investors. The pandemic pushed the company to a 659
million pound loss for 2020, but over the three years before
COVID-19 restrictions, it also made a loss, the group's annual
reports show.
($1 = 0.7204 pounds)
(Reporting by Sarah Young. Editing by Jane Merriman)
