Money

What Virgin Australia’s return to the ASX will mean for investors

Published

6 months ago

June 6, 2025

The Conversation

Virgin Australia is coming back to the share market. Here’s what this new chapter could mean

Rico Merkert, University of Sydney

It is finally happening. After five years of being a private company, Virgin Australia will relist on the Australian Securities Exchange (ASX) on June 24. The company is expected to raise A$685 million through the initial public offering (IPO).

So, who will benefit from Virgin Australia’s return to the share market? Having paid $3.5 billion for the bankrupt carrier back in 2020, private equity firm Bain Capital will be the most immediate winner.

Earlier this year, Bain had sold 25% of the company to Qatar Airways. Now, with the IPO, Bain will reduce its stake from about 70% down to 40%. Most of the $685 million raised will go straight to Bain.

With Virgin’s anticipated market capitalisation close to $2.3 billion and enterprise value of reportedly up to $3.6 billion, it is now evident that Bain has – with Jayne Hrdlicka at the helm of the airline – not only managed to turn the company around, but to also profit nicely from doing so.

Without Bain’s rescue at the beginning of the pandemic (which was catastrophic for airlines globally), the situation may have become quite detrimental for travellers. It also avoided having the Australian taxpayer foot the bill for a bailout.

Will the airline’s customers be better off after this? It will depend on how much, if anything, Bain chooses to reinvest in Virgin after this share offering is over. But Virgin has also recorded substantial recent profits, some of which are expected to be spent on newer aircraft and improved services.

Stronger competition for Qantas?

Looking at the strategies of both Virgin Australia and its biggest competitor, Qantas, in recent years, it seems both have learned to love playing the duopoly game.

Based on our own calculations, Virgin controls roughly 33% of Australia’s domestic seat capacity and the Qantas group (which includes Jetstar) much of the rest on the country’s core flight network.

In the 2010s, the two airlines were out-competing themselves in adding capacity to the market, which drove down yields (or revenue per passenger) and nearly killed Virgin Australia 1.0.

Now, Qantas and Virgin have new chief executives who understand both airlines can be very profitable if they show some (capacity) discipline in how many seats they create and sell.

Better services

For that reason, it’s likely not much will change in terms of competition, at least in the domestic market. But this is only true as far as capacity is concerned.

It seems reasonable to assume Virgin’s recent profits and any funds from the capital raise will only be used to support future growth if it is profitable. The majority of the profits will likely go towards fleet renewal and improvement of the airline’s product.

For consumers, this wouldn’t necessarily mean lower airfares in the domestic market. But it would mean newer aircraft and enhanced services, which is a positive for both flyers and the environment.

International departures

Virgin Australia will become a more formidable competitor to Qantas, thanks to its newly formed relationship with international partner Qatar Airways and the additional cash from relisting.

It will be interesting to observe what Qatar will do next and whether a new player – perhaps Singapore Airlines – will enter the scene and take a stake in the airline once Virgin Australia is trading publicly again.

It would not be the first time an international airline has taken a stake in Virgin Australia, and could create some interesting dynamics.

Another beneficiary is Virgin Australia’s management team, who’ve been somewhat shackled by the priority of getting the IPO off the ground. The IPO will free up management to deploy resources towards more longer-term priorities.

Many will see a significant payday – it’s estimated staff are sitting on shares that could soon collectively be worth $180 million.

Why now?

Bain Capital has timed this IPO carefully. Virgin Australia has (in tandem with Qantas) produced a stellar financial performance in the last financial year. It may deliver an even better one in the current reporting period.

To maximise returns, it is likely Bain did not want to waste the opportunity to capitalise on the moment. Global markets are still full of volatility and geopolitical uncertainty. What may diminish is the financial performance of the core business Bain Capital is trying to sell.

At $2.90 a share, Virgin Australia will have a price-to-earnings ratio (used to assess how relatively expensive a share price is) of seven times its expected earnings this financial year. This is lower than Qantas’ ratio of ten times expected earnings this financial year.

Profits are likely to remain high this year, with continuing strong demand, high yields and low jet fuel prices. The brokers and underwriting investment banks will use this to sell the story.

IPOs can sometimes deliver those already holding shares in a company significant day-one windfall profits. In this case, however, Bain’s expertise in the venture capital market means it is unlikely to leave any money on the table.

One may also argue while Virgin appears to be priced at a discount compared to Qantas, there may be legitimate reasons for the price differential, such as Qantas’ very profitable loyalty business.

Given uncertainties around demand and geopolitical tensions, there is no guarantee the share price of Qantas will remain at record highs for too long, which means the opportunity to present Virgin shares as a bargain may be short-lived.

In the long term, it is widely agreed airlines are by definition volatile investments and not necessarily something the average investor should have in their portfolio.

Moving forward

Symbolically, the decision for Virgin to use a new stock ticker – VGN instead of the old VAH – may avoid bringing back bad memories.

Five years can be a lifetime in aviation, but maybe not to bond holders who got just 10 cents in the dollar and shareholders (including the large airline partners who held equity stakes) who got nothing when the airline collapsed in 2020.

From a strategy perspective, it will be important for management to avoid history repeating itself with international airlines buying into Virgin and securing board seats.

This can be one way of influencing the strategy of the carrier’s domestic arm to funnel more passengers to their own international flights.

It is positive, for both Virgin Australia and the Australian aviation industry, that Bain Capital appears set to pull this off and that the revitalised airline is now truly Virgin Australia 2.0.

Clarification: this article has been amended to clarify that most of the $685 million raised will go to Bain Capital.

Rico Merkert, Professor in Transport and Supply Chain Management and Deputy Director, Institute of Transport and Logistics Studies (ITLS), University of Sydney Business School, University of Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Money

Green finance was supposed to contribute solutions to climate change. So far, it’s fallen well short

Published

1 week ago

November 11, 2025

The Conversation

Simon O’Connor, The University of Melbourne; Ben Neville, The University of Melbourne, and Brendan Wintle, The University of Melbourne

A decade ago, a seminal speech by Mark Carney, then governor of the Bank of England and current Canadian prime minister, set out how climate change presented an economic risk that threatened the very stability of the financial system.

The speech argued the finance sector must deeply embed climate risk into the architecture of the industry or risk massive damages.

It was Carney’s description that stuck, calling this the “tragedy of the horizon”:

that the catastrophic impacts of climate change will be felt beyond the traditional horizons of most actors, imposing a cost on future generations that the current generation has no direct incentive to fix.

He added that by the time those climate impacts are a defining issue for financial stability, it may already be too late.

What happened next

Carney’s speech triggered global financial markets to start accounting for risks related to climate change. Done well, green finance would flow to those companies contributing solutions to climate change. Those damaging the climate would become less attractive.

Governments rolled out strategies to support this evolution in finance, in the European Union, United Kingdom, and Australia’s Sustainable Finance Strategy in 2023.

Carney’s solution to this tragedy lay in better information. In particular, companies must report consistently on their climate change impacts, so that banks and lenders could more clearly assess and manage these risks.

A global taskforce was established that set out standards for companies to disclose their impacts on the climate. These standards have subsequently been rolled out around the world, most recently, here in Australia.

Finance has yet to deliver for the environment

But has Carney’s tragedy of the horizon been remedied by these efforts?

There have been some successes: the global green bond market has grown exponentially since 2015, becoming a critical market for raising capital for projects that improve the environment.

However, beyond some positive examples, the tragedy of the horizon remains. Indeed, the Network for Greening the Financial System (a grouping of the world’s major central banks and regulators from over 90 countries) concluded climate change is no longer a tragedy of the horizon, “but an imminent danger”. It has the potential to cost the EU economy up to 5% of gross domestic product by 2030, an impact as severe as the global financial crisis of 2008.

A report this year found climate finance reached US$1.9 trillion (A$2.9 trillion) in 2023, but this was far short of the estimated US$7 trillion (A$10.7 trillion) required annually. A step change in the level of investment in low carbon industries is required if we’re to achieve Paris Agreement goals.

In the decade since Carney’s speech, other critical sustainability issues have arisen that threaten the financial system.

The continuing loss of biodiversity has been recognised as posing significant financial risks to banks and investors. Up to half of global GDP is estimated to depend on a healthy natural environment.

The economic cost of protecting nature has been put at US$700 billion (A$1.07 trillion) a year, compared with only US$100 billion (A$153 billion) currently being spent.

The finance sector is falling well short of delivering the level of capital needed to meet our critical sustainability goals. It continues to cause harm by providing capital to industries that damage nature.

Dealing with symptoms, not the cause

Despite nearly a decade of action in sustainable finance, the extensive policy work delivered to fix this tragedy has merely subdued the symptoms, but to date has not overcome the core of the problem.

The policy remedies put forward have simply been insufficient to deal with the scale of change required in finance.

While sustainable finance has grown, plenty of money is still being made from unsustainable finance that continues to benefit from policies (such as subsidies for fossil fuels) and a lack of pricing for negative environmental impacts (such as carbon emissions and land clearing).

While policies such as better climate data are a prerequisite to a greener finance system, research suggests that alone they are insufficient.

The University of Melbourne’s Sustainable Finance Hub works to rectify this tragedy, using interdisciplinary solutions to shift finance to fill those significant funding gaps.

1. The tools of finance need to evolve, in terms of the way assets are valued and performance is measured, ignoring negative impacts. Currently, investors disproportionately focus on the next quarter’s performance, rather than the long-term sustainability of a company’s business model.

2. Big sustainability challenges such as climate change and nature loss require a systems-level approach. Chasing outsized returns from individual companies that are creating climate problems can undermine the success of the whole economy. This in turn can erode overall returns across a portfolio.

3. Capital is simply not flowing to sectors critical to our achievement of net zero and a nature-positive economy. These include nature protection, emerging markets, climate adaptation, health systems and Indigenous-led enterprises.

4. “Invisible” sectors in the economy continue to emit greenhouse gases without investor scrutiny. State-owned enterprises and unlisted private companies are essential to decarbonise, but are left out of the regulatory response.

Without a doubt, Carney helped us to recognise that our biggest sustainability challenges are also our biggest economic challenges.

Despite a decade of momentum for sustainable finance, the tragedy of the horizon looms large. New approaches to finance are required to ensure our future is protected.

Simon O’Connor, Director, Sustainable Finance Hub, The University of Melbourne; Ben Neville, A/Prof and Deputy Director of Melbourne Climate Futures, The University of Melbourne, and Brendan Wintle, Professor in Conservation Science, School of Ecosystem and Forest Science, The University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Money

Are we in an AI bubble or just a market reality check?

Tech stocks falter as AI boom faces reality; market shifts towards gold amidst growing investor caution.

Published

2 weeks ago

November 6, 2025

Ahron Young

Tech stocks falter as AI boom faces reality; market shifts towards gold amidst growing investor caution.

Global tech stocks are losing altitude as investors question whether the AI boom has gone too far — or if the market is simply returning to earth after years of euphoric growth. With valuations for chipmakers and AI giants stretched to perfection, analysts warn that expectations may finally be colliding with economic reality.

In this segment, Brad Gastwirth from Circular Technologies joins us to unpack the trillion-dollar question: is this a healthy correction or the first crack in the AI gold rush? From hyperscaler capex surges to regulatory risks and fragile market leadership, he breaks down what’s driving investor nerves.

We also explore how the market rotation into gold and real assets reflects growing caution, and what this could mean for the future of AI-driven investing.

Subscribe to never miss an episode of Ticker – https://www.youtube.com/@weareticker

#AIBubble #TechStocks #MarketCorrection #Semiconductors #Investing #FinanceNews #AIStocks #TickerNews

Money

Inflation rise reduces chances of Reserve Bank rate cut

Inflation spikes, drastically reducing chances of a Reserve Bank rate cut amid economic pressures and rising costs

Published

3 weeks ago

October 29, 2025

ticker NEWS

Inflation spikes, drastically reducing chances of a Reserve Bank rate cut amid economic pressures and rising costs

In Short:
– Rate cut likelihood by the Reserve Bank has decreased due to a rise in annual inflation to 3.2 per cent.
– Significant price increases in housing, recreation, and transport are raising concerns for the Reserve Bank.

The likelihood of a rate cut by the Reserve Bank has decreased significantly after a surge in annual inflation.

The Australian Bureau of Statistics reported that inflation for the year ending September rose to 3.2 per cent, reflecting a 1.1 per cent increase.

Trimmed mean inflation, a crucial measure for the Reserve Bank, was recorded at 1 per cent for the quarter and 3 per cent for the year. The bank anticipates inflation to reach 3 per cent by year-end, while trimmed mean inflation is expected to slightly decrease.

The quarterly rise of 1.3 per cent in September exceeded expectations. Governor Bullock noted that a deviation from the Reserve Bank’s projections could have material implications.

Financial markets reacted promptly, with the Australian dollar rising against the US dollar, while the ASX200 index fell.

The most significant price increases were observed in housing, recreation, and transport, indicating widespread price pressures that concern the Reserve Bank.

Despite the unexpected inflation rise, some economists believe the Reserve Bank may still consider rate cuts in December, viewing current price spikes as temporary due to the winding back of subsidies.

Economic Pressures

Broad-based economic pressures suggest that the Reserve Bank may not reduce interest rates at its upcoming meeting. Analysts highlight the need for ongoing support for households facing cost-of-living challenges.