The sudden resignation of the CEO of Virgin Australia (VA, Brisbane International) has scuttled the likelihood of any IPO in the short to medium term, according to Australian business media. Bain Capital, the owners of Australia's second-largest scheduled passenger carrier, had initially hoped to partially float the airline last year. Instead, with changed market conditions and the exit of CEO Jayne Hrdlicka, Bain is reportedly looking at a trade sale.
Bain acquired Virgin Australia for AUD3.5 billion Australian dollars (USD2.28 billion), including liabilities, in late 2020 after the carrier collapsed earlier in the year. The airline is now profitable but is struggling to claw additional market share from Qantas Group and is experiencing significant reliability issues.
In a statement dated February 20, 2024, Virgin Australia said Hrdlicka had "decided now is the time to transition on from the role of CEO." However, The Australian newspaper later reported that Bain Capital had been unhappy with Hrdlicka's performance for 12 months, including her failure to capitalise on rolling problems at Qantas (QF, Sydney Kingsford Smith) in 2023. Hrdlicka's side hustle as Tennis Australia chairwoman and her consequent time-consuming involvement in the Australian Open also reportedly left Bain underwhelmed. On February 19, Bain told Hrdlicka her time was up.
Initial IPO plans failed to gain traction after a series of investor roadshows were abruptly cancelled last April when Hrdlicka took personal leave (her husband died the following month). However, any IPO would be pure profit for Bain after it pocketed almost AUD730 million (USD477 million) in May, roughly equal to what it paid in cash to buy the airline after Virgin Australia decided to return capital to its shareholders. Bain owns 93% of the airline, with the Virgin Group holding 5%, and the Queensland Investment Corporation owning 2%.
The CEO's departure reportedly seals the fate of any IPO plans in the short to medium term. While the airline's financial position is fair, albeit not stellar (it reported an AUD129.1 million (USD84.3 million) profit for the 12 months to June 30, 2023), its operational issues and market sentiment have all combined to sink any immediate IPO prospects. However, The Australian reports that Bain is mulling a straightforward trade sale, which would still provide the private equity firm with a profitable exit strategy. A Bain Capital spokesperson declined to comment to ch-aviation on their future plans concerning Virgin Australia.
Meanwhile, Virgin Australia has tapped Korn Ferry to find its next CEO.