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8th Dec 2003, 10:38

Virgin Blue flying high
December 8, 2003

THE head of Virgin Blue Holdings Ltd's major shareholder said today he was pleased with the debut price of the discount airline on the Australian Stock Exchange (ASX).

Shares in Virgin Blue debuted at $2.40, a 15 cent premium to the $2.25 issue price for shares in its public offering.

The airline, owned by Sir Richard Branson's Virgin Group and Australian transport logistics group Patrick Corp, made its keenly anticipated debut at noon AEDT.

"I'm always happy if it opens above the sale price – it's a little bit above – I think that indicates a pretty successful float and that the underwriters got the thing pretty close," Patrick managing director Chris Corrigan said.

"It looks to be quite a good outcome."

Virgin Blue's initial public offering closed more than ten times oversubscribed and the pricing of shares in the IPO was at the top end of an indicative range of $1.80 to $2.25.

By 1225 AEST, the shares were trading at $2.42, on turnover of more than 38.0 million shares.

Mr Corrigan, whose company will maintain a 45 per cent share in Virgin Blue now that it has listed, said he could foresee no major shake-up of management now the company had listed.

"Our intention at the present time is to stay at 45 per cent and we have declared that we are happy with the existing management group and that continues to be the case," Mr Corrigan said.

"They're the ones that built the airline and we are particularly keen to see them stay on."

He said Patricks had spent somewhere "in the order of $130 million" to maintain its stake in the airline during the float process.

Virgin Blue Patterson Ord Minnett senior client adviser Ric Klusman said Virgin Blue had made a strong stock market debut. "It's much better than most people expected," he said.

"It's been very well managed by the underwriters.

"I guess with Virgin, there's probably a lot of potential growth that Qantas may not have, but when (Qantas's discount carrier) JetStar comes in I think that there might be some problems."

Sir Richard was at the Australian Stock Exchange's headquarters in Sydney to witness Virgin Blue's stock market debut at 1200 AEDT.

"I am just going to ring the bell – it feels really good, we are very positive but you never really know with the market," he said ahead of the listing.

Sir Richard's other business ventures in Australia include a Virgin credit card.

He said today his next project for Australia would be to introduce Virgin Radio.

"We are certainly planning to," Sir Richard said.

"We are trying to get hold of a licence so we can do it so we are working on it at the moment."

Virgin Blue yesterday said despite the massive oversubscription, staff would receive 100 per cent of shares requested.

Virgin Blue email subscribers and valued customers would receive the minimum $5000 of shares and 50 per cent of any shares applied for after that.

The general public would receive the $5000 minimum application and 25 per cent of all extra shares requested.

Sir Richard, who was considering selling down his stake in the carrier to between 29.1 and 25.1 per cent, has opted over the weekend to keep just 25.1 per cent, in response to requests from institutions for greater liquidity in the stock.

This would raise Virgin's capital raising to more than $600 million and help the carrier take on Qantas' low-cost offshoot Jet Star, due to take to the skies in May next year.

Virgin Blue founder Sir Richard Branson, who has agreed to cut his 29.1 per cent stake down to 25.1 per cent due to the high demand for shares, later said he was "delighted" at the stock's debut price. "We'll have to wait until the close of play today but from the way it's going, it's looking good so far," Sir Richard told AAP.

"We've obviously got the float away, with the support from 250 institutions, from our staff and from members of the public.

"It's always nice that after a float the people can see that they've got an immediate paper profit, but the important thing is that in a year or two from now, that we've delivered and continue to deliver.

"So it's the start of a long process but it's a great, great start."

On the subject of Qantas' low cost airline to be launched next May, JetStar, Mr Branson said it was likely to "bastardise" its mainline operation.

"We've jokingly re-named it `OneStar' on the basis that they've said they are going to cram in as many seats as possible," he said.

"In our opinion, they're likely to bastardise Qantas' mainline operation.

"We're not worried about it; I think the chances are that it is just going to cause Qantas a lot of damage."

Sir Richard said it would be a "bizarre situation" should Qantas run JetStar flights in competition with its more expensive mainline operation.

"Personally, I think the whole thing is a device to get around the unions and it's whether they can get away with it that will be the interesting question mark," he said.

Virgin Blue Holdings chief executive Brett Godfrey said this morning that Qantas' mainline operations on the east coast of Australia would last only three to five years in their current form.

Mr Godfrey told reporters there was little doubt Qantas intended to rely on the low-cost JetStar model, which is set to begin in May next year.

"In the next three to five years, you probably won't see the mainline as it is today," Mr Godfrey told journalists.

"I just don't believe people are going to pay $1,000 for a round ticket between Sydney and Melbourne in business class.

"So, I think JetStar is ultimately what Qantas wants to move to but with the transmission of business issues and the illegalities that surround that, they're going to have a tough time."

Mr Godfrey and airline founder Sir Richard Branson both said they believed their low cost model could continue to work in Australia in the future.



Johhny Utah
8th Dec 2003, 12:32
Gee, what a smashing bloke that Branson is - here's just another example of his generosity::rolleyes:
Virgin Blue founder Sir Richard Branson, who has agreed to cut his 29.1 per cent stake down to 25.1 per cent due to the high demand for shares, later said he was "delighted" at the stock's debut price. "We'll have to wait until the close of play today but from the way it's going, it's looking good so far," Sir Richard told AAP.
where would all the poor punters be if Branson wasn't here to cash in? Perhaps in 12-18 months time many will rue the decision to jump on the virgin bandwagon. :confused:

However, as long as Godfrey, Hutton, Raby et al make mega $$$ on the backs of their staff, then I guess it's all o.k....:mad:

Al E. Vator
8th Dec 2003, 15:40
...get a grip on reality.

If there was no Branson the thing wouldn't be there in the first place.

8th Dec 2003, 18:22

Virgin Blue proves tough competition for Qantas The World Today - Monday, 8 December , 2003
Reporter: Jo Mazzocchi

TANYA NOLAN: Now to a story that's bound to delight the flying public. Analysts are predicting that the aviation price war is likely to become a permanent feature of the Australian market, after today's public float of the low cost carrier, Virgin Blue.

As expected, the float listed at the premium price of $2.40 on the Sydney Stock Exchange this morning. The float has proved popular with big and small institutional investors. But market watchers wonder whether the airline can sustain its low prices in the long term, with rising labour costs and competition from Qantas serious issues for the carrier.

But Virgin Blue has dismissed those concerns, saying it's putting Qantas on notice, and that it will not be outdone by the flying kangaroo.

Jo Mazzocchi was at the float for The World Today.

(Sound of Richard Branson counting down to the float: "And we are down to five, four, three, two, one!" Sound of bell ringing and applause)

JO MAZZOCCHI: In true Richard Branson style, he rang the ceremonial bell at the Australian Stock Exchange not once or twice as is the usual practice, but as many times as he could. Clearly delighted at the success of today's float of Virgin Blue, Sir Richard, the company's founding partner, said it was a very proud day.

(To Richard Branson) Sir Richard, if I can start, obviously a very proud day for you.

RICHARD BRANSON: Yeah, very proud day for all the 3,400 people who work for Virgin Blue and what they've created in the last three years – a company that's now got 250 institutions on board, a company that's got 93 per cent of its staff as shareholders, and a company that's willing to take on Qantas and keep them honest.

JO MAZZOCCHI: That was a sentiment echoed by Brett Godfrey, the company's CEO. Today's float has raised $666 million for the low-cost carrier. It's also seen its market value now exceed more than $2.4 billion – not bad for a company that started with just $10 million.

Brett Godfrey.

BRETT GODFREY: Well, it's like I'm at a debutante's ball. It's like, seriously, with the birth of the airline back in, you know, it was August 25th 2000 when we got our licence, that was the most exciting day for me, not the first flight, which was five days later on the 30th. That was like the birth of my third child.

And here it is today, we're sending it around in the wide world to a fair degree. And that's how I perceive it. She's grown up a little bit.

JO MAZZOCCHI: And Brett Godfrey says the air war with Qantas has just begun.

You're saying Jetstar won't survive?

BRETT GODFREY: No, I'm not saying that. I'm probably more saying that the mainline won't survive. I don't believe the mainline on the east coast of Australia will be in its current form in three to five years time. It just seems clear to me that our model is very much more relevant, which is why corporates, our corporates have grown exponentially in the last 6 to 12 months.

All those things are now making us… being no different to Qantas in terms of anything other than great service and better pricing.

JO MAZZOCCHI: Ian Thomas is a senior consultant for the Centre for Asia Pacific Aviation. He says today's float represents good value for investors, but the question is, can Virgin Blue sustain its low prices?

IAN THOMAS: It really depends on how you view Jetstar's creation, you know, whether it was seen as a spoiler by Qantas and an attempt perhaps, to deter investors from investing in Virgin Blue.

From that point of view it seems to have failed. Clearly Virgin Blue was ten times plus oversubscribed, which indicates that there was strong investment demand, despite the Qantas announcement. The issue will really come down to how that materialises in terms of competition in the market later on.

JO MAZZOCCHI: And do you think that both airlines can continue to operate?

IAN THOMAS: Well, certainly all the players in the market are confident of that. We haven't seen too much positive news about that in the past, certainly the past ten years. But really, we're seeing two major operators in the market just really fragmenting into a number of different operations.

What will change, though, is essentially some of the dynamics at the discretionary travel end. And that's really the end that Jetstar's approaching, and Virgin Blue will really have to counter effectively if it wants to be profitable and continue to grow at the same rate as it has done, in the future.

TANYA NOLAN: Aviation analyst, Ian Thomas, speaking there to Jo Mazzocchi.


bitter balance
8th Dec 2003, 20:09
There were 50-70 million reasons for BG to be excited methinks. The pure thrill of floating the company wasn't one of them!

Home Brew
9th Dec 2003, 05:06
BTW - BG is now known as the $100 million dollar man by his staff - Pity he doesn't share it around!! :eek:

9th Dec 2003, 08:31
93% of it's staff as shareholders.
so either some of the staff did'nt get a free allocation or, some of them knocked the shares back:cool:

9th Dec 2003, 13:22
Tues "The Australian"

Virgin Blue flies to $2.5bn
By Steve Creedy
December 09, 2003

Believers yesterday backed Virgin Blue's claim it could fend off a low-cost Qantas challenge with strong support that drove the airline's newly listed shares 8 per cent above their float issue price.

Virgin Blue shares closed at $2.43, compared with the issue price of $2.25, to give the airline a market value of almost $2.5 billion and make it the biggest float of 2003.

The strong debut also pushed the total capitalisation of the Australian stock market to a record $750 billion – ranking it among the top nine stock exchanges in the world.

More than 100 million Virgin shares changed hands in frantic first-day trading.

The initial public offering closed on Friday more than 10 times over-subscribed, setting the share price at the peak of the indicative range and fuelling weekend expectations of a strong debut.

The investor response convinced part-owner Richard Branson's Virgin Group to sell down its stake in the airline to 25.1 per cent. Co-founder Patrick Corp, however, spent $81 million, after taking into account a $45 million dividend, to maintain a 45 per cent controlling stake.

The change in control is not expected to produce major changes at Virgin Blue and Patrick boss Chris Corrigan yesterday reiterated statements that he was happy with the airline's management.

Virgin's $2.25 share price values the capital raising at $666 million – more than $100 million above initial predictions – and provides the airline with a war chest to counter Qantas and fund future expansion.

Chief executive Brett Godfrey said the airline's float and its success over the past three years had exceeded management expectations. "We always felt it was going to be successful but in our wildest dreams not like this," he said.

Mr Godfrey said he was particularly pleased by the response of institutional investors to the float. The airline had an exceptional share register with "pretty much a who's who" of investors and he was particularly happy about the support from Australian funds.

"Some people were querying why we should be a premium to Qantas in Australia but as it turned out the Australian markets were overwhelmingly supportive," he said.

Two thirds of the shares in the float will go to institutional investors and the rest to retail investors, including nine out of 10 Virgin staff.

A scale-back means investors receive their minimum allocation plus a percentage of their total request.

With the float behind them, Virgin Blue executives are now turning their attention to the launch next May of Qantas's low-cost offshoot JetStar.

Qantas has said the new airline will fly with lower costs and fares than Virgin Blue but Virgin executives are sceptical and believe JetStar is more likely to affect Qantas's mainline operations.

"I honestly don't believe it will get to our cost base unless it's going to be the cheapest, nastiest airline ever to fly the skies," Mr Godfrey said.

Mr Godfrey said he doubted Qantas's mainline service would survive in its current form beyond the next three to five years and that the airline as a whole would move to a more relevant low-cost model.

Meanwhile, the Civil Aviation Safety Authority is working with Virgin to fix maintenance inventory problems that have prevented the airline flying extended-range twin-engine operations.

A CASA spokesman said the authority had not taken regulatory action and the problems did not pose a safety risk.


Tues ASX- Virgin Blue close $2.51 an increase of of 3.29% on
yesterdays close of $2.43



9th Dec 2003, 15:00

I'm like a proud father: Virgin boss
December 9, 2003

Virgin Blue chief executive Brett Godfrey said he felt like a proud father who's daughter's just made her social debut.

And what a glittering debut.

With champagne corks popping, more than 100 million shares were traded on Monday as Virgin Blue listed on the stock market, with the value of the discount carrier rising from $2.3 billion to $2.45 billion.

Mr Godfrey said when the airline was launched three years ago it was like seeing the birth of his child and with the float completed he now wanted to see her grow up.

"It's like we're at the debutant ball today," he said.

"We're passing our daughter out into the real world.

"The only problem is that she's passing through 16 pairs of hands and shareholders but I'll still look after her and she'll stay with us for a long, long time."

It was a day when the staid corporate world of high finance gave way to the funsters of Virgin Blue.

Mr Godfrey, Virgin group founder Sir Richard Branson and other staff started the day in the Australian Stick Exchange (ASX) in Sydney.

The ASX was decked out like Virgin Blue's own blue room with massage tables complete with six airline hostesses with red floaties in attendance.

After the shares debuted at $2.40, well above the issue price of $2.25, and the media obligations were out of the way, the Virgin Blue party flew up to Brisbane.

On the way passengers were served drinks by Sir Richard and Mr Godfrey before they arrived at the ASX in Brisbane to see the share price settle at $2.43 at the close of trade.

Mr Godfrey said Virgin Blue now had more Australian shareholders in terms of volume and percentage than Qantas.

"We have become more Australian than (the) so-called Australian carrier and I think that's a tremendous result," he said.

"I think it's been a great day for the Australian public."

©2003 AAP


9th Dec 2003, 16:19
"Meanwhile, the Civil Aviation Safety Authority is working with Virgin to fix maintenance inventory problems that have prevented the airline flying extended-range twin-engine operations."

Tell me more :O

Z Force
10th Dec 2003, 03:30
So do they mean to say they have lost their ETOP's approval? One would think the media would have a field day on that.

10th Dec 2003, 07:32
Don't think they ever had ETOPs approval, did they ?

You've got to hand it to the VB PR wagon, all the hype has pushed the share price up, of course, the real indicator wil be shareholder return ( including dividends ) after, say, 3 years.
Although somehow, I don't think Godfrey, Raby et al will be too concerned with this.

14th Dec 2003, 07:48
Just a simple question (or two)
1.With-out an ETOPS approval how can Pacific-blue operate is o/water legs ??
2.Doesn't it take aprox 12 months or so of recorded history (zero fault with records) to be granted an ETOPS approval on a per hull bases ?? (that is no blanket cover for fleet)

16th Dec 2003, 22:58
Dow Jones

Tuesday December 16, 5:56 PM AEDT
INTERVIEW/Virgin Blue: Confirms Asia Carrier Talks
By Lilly Vitorovich

BRISBANE (Dow Jones)--Australian discount airline Virgin Blue Holdings Ltd. Tuesday vowed to protect its market share, which is nudging 30%, from rival Qantas Airways Ltd. and its offshoot Jetstar.

Virgin Blue chief executive Brett Godfrey said the company's market share has grown to around 30%, from the 28%-plus figure at the end of August which was quoted in its 178-page share offer prospectus.

"Let's just say it's around 30%," Godfrey told Dow Jones Newswires during a phone interview, adding the carrier has added more flights and routes over the past three and a half months.

The Brisbane-based airline, which was launched by U.K. entrepreneur Richard Branson in August 2000, is expected to issue a market share update in the next day or so, Godfrey added.

Virgin Blue has proved a formidable competitor to Qantas due to its low cost base, cheap airfares and the gap in the Australian market following the demise of two carriers, Ansett Australia and Impulse Airlines.

The company made a solid debut last week on the Australian Stock Exchange, listing at A$2.40 a share, compared with the IPO price of A$2.25. It was at A$2.38 in late Tuesday trade, down four cents.

Godfrey said he remains comfortable with the net profit forecast of A$150 million for the 12 months ending March 31, 2004, up 36% from a year ago. It also forecast a 52% rise in sales to A$1.39 billion in fiscal 2004 from A$914.6 million in fiscal 2003.

"I would expect to make our forecasts," he said.

Godfrey expects "deep discounting" when Qantas launches Jetstar next May, but will fight to keep Virgin Blue's leading role as Australia's low fair airline.

"My view is if they're irrational, we will be rationally irrational." Virgin Blue has offered extremely cheap seats, with bookings only via the Internet and usually for a short period, when it has launched services around Australia.

While the company is focused on its domestic operations, Godfrey also acknowledged that the New Zealand market might not be the same early success story. At home, the collapse of Ansett instantly opened up substantial market share for the incumbents Virgin Blue and Qantas.

The carrier, which will operate in New Zealand under the name of Pacific Blue, plans to begin operations at the end of next month with a fleet of just two. Godfrey declined to outline the group's market share projections for New Zealand, noting it depends how many planes it decides to fly and the impact of any alliance between Qantas and Air New Zealand Ltd. that is now being opposed by regulators.

"Ultimately I'd like us to get to a sustainable level. And I think sustainable is more than single digits, it's got to be north of that and history has shown that we can do that."

"I'm comfortable, I've seen nothing in the New Zealand operations to date that suggests that we're not going to be a player in that market," he said.

Pacific Blue will commence services to the South Pacific region, including Fiji, Samoa and Vanuatu, sometime next year, he added.

Godfrey confirmed that Virgin Blue has held talks with a number of Asian carriers including Malaysia's budget carrier AirAsia and Thai Airways International Pcl about possible collaborations, but downplayed the level of discussions.

"To be quite frank, I've probably spoken to four or five carriers in Asia, more so about ground handling, sharing of ideas, maybe sharing of equipment, those sorts of things.

"We have had very very loose discussions but nothing that's substantial enough that I'd even need to convey to anybody at this time," he said.


17th Dec 2003, 11:00
I was told that a share guru on John Faines program (3LO) the other day gave Virgin shares the thumbs down as they are too highly geared and unstable. Apparently he said something about one of Branson's other airlines falling over.