Virgin Australia Board Mulls Privatisation
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Put this one in the ‘who cares?' basket.
Virgin Australia annual meeting was told yesterday that its board has been considering mopping up the minority shareholders on its register and making the airline a private company.
The company’s chair Elizabeth Bryan told the Brisbane meeting on Wednesday that the board had discussed privatising the company, but that there was “no outcome to report to the market at this stage”.
More than 91% of the company’s shares are held by Etihad Airways, Singapore Airlines, Chinese conglomerate Nanshan Group, Chinese aviation giant HNA Aviation Group and Richard Branson's Virgin Group.
“It is my responsibility, and that of all our directors, to ensure that the interests of the minority shareholders are represented by the board,” Ms Bryan said.
The shares jumped 8% yesterday on the news to 22 cents and are up 18% in a month, but down 4% over the past 12 months. In other words it is a dud with the ASX 200 up more than 14%.
The answer for the weak performance is the small float - around 9% of the shares are in public hands and the market value is less than $175 million - Virgin Australia is a tiddler and its only interest is that it is an airline, Richard Branson, the founder maintains a 10% stake and it competes with Qantas and it has a good PR machine. There is no dividend and no future unless its ownership is resolved.
One of the shareholders, Etihad sparked some interest this week by buying a 9.6% stake in Cathay Pacific.
Ms Bryan told investors at the Brisbane meeting 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.
Virgin CEO John Borghetti told the meeting the company ran at an underlying profit before tax of about $14.5 million in the first quarter of the 2017-18 financial year, up from a $3.6 million loss in the same period last year.
That came from a 5.7% increase in total revenue, improved domestic passenger numbers, and an 8.8% 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.
Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.