Virgin Australia Launches A$350 Million Share Issue

   By Ross Kelly 
 

SYDNEY--Virgin Australia Holdings Ltd. (VAH.AU) on Thursday launched a 350 million Australian dollar (US$328 million) share issue to strengthen its balance sheet in the face of ongoing tough trading conditions for airlines.

All of the company's major shareholders--Air New Zealand Ltd. (AIR.NZ), Singapore Airlines Ltd. (C6L.AU), Etihad Airways and Richard Branson's Virgin Group--will take up their offer entitlements in full, Virgin Australia said.

The new shares are being issued at 38 Australian cents each, a 6.2% discount to their latest trade of 40.5 cents. Air New Zealand, Singapore Airlines and Etihad are underwriting the deal.

Sankar Narayan, Virgin's chief financial officer, told The Wall Street Journal the offer will bring the company's liquidity up to a level more in line with its industry peers.

The capital increase comes after Virgin Australia invested heavily to try and snatch business-class customers from main rival Qantas Airways Ltd. (QAN.AU). The program included rolling out business-class seats on its jets for the first time, improving airport lounges and changing its ticket booking system.

The airline's revenue is still coming under pressure from high jet fuel costs, fragile consumer confidence and intense competition with Qantas on domestic routes.

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