Yesterday Virgin America raised $305.9 million in its initial public offering (IPO), which met expectations.
Virgin America offered 13,337,587 shares of its common stock at a price to the public of $23.00 per share. Virgin America offered 13,106,377 shares. VX Employee Holdings, a Virgin America employee stock ownership vehicle, offered 231,210 issued and outstanding shares as a selling stockholder. In addition, certain selling stockholders granted the underwriters a 30-day option to purchase up to an additional 2,000,638 shares of common stock. The shares will begin trading today on the NASDAQ Global Select Market, under the symbol "VA".
Barclays and Deutsche Bank Securities were lead joint book-running managers for the offering. BofA Merrill Lynch, Cowen and Company, Goldman Sachs, Imperial Capital, LOYAL3 Securities and Raymond James are acting as co-managers for the offering.
The stock sale values the airline at about $972.9 million.
At the same time as the IPO, the Virgin Group and hedge fund Cyrus are planning to sell about $52.1 million in shares in the airline to another hedge fund, PAR Capital, at a per-share price 4 percent lower than the IPO price, according to the IPO prospectus. PAR Capital can call off the deal if the price range rises any higher.
Barclays and Deutsche Bank led the IPO.
Meanwhile, the American airline market remains so very strong at this time. Allegiant in February will begin its Indianapolis International Airport services to Las Vegas, Orlando, Tampa Bay and Southwest Florida and this is one expansion to keep an eye on. Allegiant has a great deal of management work to do to keep the ULCC model rolling as new aircraft deliveries take it away from its original model with the MD80 aircraft.
The ULCCs in the US market are doing so very well at this time and they must not take the foot off the gas as oil prices continue to weaken. JetBlue is gaining from its Middle East carrier tie-up but no airline is better set for the future than Frontier in the domestic US market, its network is looking very strong (seeAirline Economics Issue 21 for market detail). Frontier’s gains at Washington DC are impressing. Of all the airlines across the globe this is the one to keep an eye on for significant news in early 2015.