Virgin IPO On The Way, May Be Good for Qantas Stocks

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Talks about Virgin relisting back in the ASX are hot. The company is set to discuss with several banks the potential relisting in the Australian share market. This may be good for Qantas, experts say.

Mike Murphy, a Sydney-based partner with Bain, noted, “In the coming months, we will consider best positioning Virgin Australia for continued growth and long-term prosperity. It is Bain Capital’s current intention to retain a significant shareholding in a future IPO of Virgin Australia.”

The announcement supports Virgin CEO Jayne Hrdlicka’s commentary in an interview last June 2022 that the company’s goal is to be publicly listed. In November, Hrdlicka reported that the company had returned to making profits.

Mike Murphy, a Sydney-based partner with Bain, noted, “In the coming months, we will consider best positioning Virgin Australia for continued growth and long-term prosperity. It is Bain Capital’s current intention to retain a significant shareholding in a future IPO of Virgin Australia.”

According to James Rutledge, Perpetual’s pure value fund portfolio manager, “Qantas has been a standout performer post-COVID, and there are likely further upgrades to come. We always felt it was extremely well positioned to recover in the short term, but we currently see Qantas starting to approach fair value. The unexpected strength of consumer spending has helped them rebound quickly, but we do see that paring back throughout 2023.”

Qantas’ share price has shown resilience, showing a 7.8 per cent increase since the start of the calendar year and up by 40 per cent over the past six months. Qantas management also estimated that their underlying profit before tax is expected to be within $1.35 billion and $1.45 billion in the first half.

Rutledge added that they are confident that Virgin re-entering the stock market will be able to change the competitive landscape materially. He predicts Virgin will focus on meeting prospectus forecasts and profit over market share.

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