Virgin Australia (VA, Brisbane International) is negotiating with investment banks for a AUD450 million Australian dollar (USD297 million dollar) loan to pay its owner, Bain Capital, ahead of an expected IPO in mid-2024, according to Reuters. The proposed cash payment reflects a strong financial turnaround for the carrier while under the ownership of the Boston-based private equity business.

The report suggested Virgin Australia had been talking to UBS and Goldman Sachs about the loan, which a previous ch-aviation report mentioned the possibility of. The two banks, along with Australian investment bank Barrenjoey, were confirmed last month as lead managers for any IPO, which could be held as soon as May. Bain Capital acquired Virgin Australia for AUD700 million (USD462 million) in equity in 2020 after the airline went into voluntary administration, also taking on AUD2.8 billion (USD1.78 billion) in debt.

The IPO is expected to raise around AUD1 billion (USD660 million), with Bain retaining a 50-60% interest in the airline that is reported to now be generating AUD400 million (USD264 million) in net income. Not being publicly listed, Virgin Australia isn't required by law to make full public financial disclosures, but any IPO is reported to put a valuation of around AUD3 billion (USD1.98 billion) on the airline.

Much of Virgin Australia's current good fortune is the result of tight capacity in the Australian domestic market and strong passenger demand. This is resulting in ongoing high ticket prices and rivers of revenue for Virgin Australia and its local competitors Qantas, Jetstar Airways, and Rex - Regional Express. Australian media have noted that it seems like a favourable time for the airline to relist on the Australian Stock Exchange (ASX) but also suggested that institutional buyers of stock may ask how long the good times can last for.

Meanwhile, a final decision about the loan and any debt the currently largely debt-free Virgin Australia may acquire ahead of any IPO is yet to be finalised.