Money

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

Published

3 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

RBA plans to ban credit card surcharges in Australia

Reserve Bank of Australia plans to ban credit card surcharges despite banks warning of potential higher fees and weaker rewards

Published

1 day ago

September 16, 2025

ticker NEWS

Reserve Bank of Australia plans to ban credit card surcharges despite banks warning of potential higher fees and weaker rewards.

In Short:
– The RBA plans to ban surcharges on debit and credit card transactions, supported by consumer group Choice.
– Major banks oppose the ban, warning it could lead to higher card fees and reduced rewards for credit card users.

The Reserve Bank of Australia (RBA) intends to implement a ban on surcharges associated with debit and credit card transactions. Consumer advocacy group Choice endorses this initiative, arguing that it is unjust for users of low-cost debit cards to incur similar fees as credit card holders.

The major banks, however, are opposing this reform. They caution that the removal of surcharges could prompt customers to abandon credit cards due to diminished rewards.

A final decision by the RBA is anticipated by December 2025.

Money

How much money do you need to be happy? Here’s what the research says

Published

2 days ago

September 15, 2025

The Conversation

Brad Elphinstone, Swinburne University of Technology

Over the next decade, Elon Musk could become the world’s first trillionaire. The Tesla board recently proposed a US$1 trillion (A$1.5 trillion) compensation plan, if Musk can meet a series of ambitious growth targets.

Australia’s corporate pay packets aren’t quite on that scale. Yet even here, on Friday it was reported departing Virgin chief executive Jayne Hrdlicka will collect nearly $50 million in shares and other cash benefits on her way out the door.

Research from the United States suggests people think the average CEO earns ten times more than the average worker – and would prefer it was closer to only five times more.

In fact, the real gap in the US over the past decade has been estimated to mean CEOs earn a staggering 265 to 300 times more than average US workers.

Australians think CEOs earn seven times more than the average worker and would prefer if it was only three times more.

But the real gap here is also much higher. A long-running study found CEOs of the top 100 Australian companies earned 55 times more last financial year than average workers.

So, how much money is enough?

People have asked this question for thousands of years. The ancient Greek philosopher Aristotle explained the idea of eudaimonia, or a roadmap of “living well”, saying it:

belongs more to those who have cultivated their character and mind to the uttermost, and kept acquisition of external goods within moderate limits, than it does to those who have managed to acquire more external goods than they can possibly use, and are lacking goods of the soul.

Aristotle’s philosophy doesn’t call on us to shun money or wealth entirely, but argues it shouldn’t become life’s sole focus.

Research over recent decades has come to different conclusions on how much money is needed to achieve peak wellbeing.

A US study in 2010 suggested wellbeing maxes out around US$75,000. This figure naturally needs to be increased today to account for inflation – which, if those research findings are still true today, would be closer to US$111,000 in today’s dollars. You’d also need to take into account the cost of living in your area.

Other findings suggest wellbeing may continually increase with growing wealth, but the increase in wellbeing from $1 million to $10 million is likely less than when someone moves from poverty to middle class.

A 2022 experiment studied 200 people from Brazil, Indonesia, Kenya, Australia, Canada, the United States and the United Kingdom who were randomly given US$10,000 (A$15,000 at today’s exchange rate).

It found people in lower income countries “exhibited happiness gains three times larger than those in higher-income countries”, including Australia. But that cash still provided detectable benefits for people with household incomes up to US$123,000 (roughly A$184,000 today).

Remarkably, the people in that experiment (explained from 4:42 minutes into the video below) gave away more than two-thirds of that money to family, friends, strangers and charities.

Valuing time and relationships

Decades of international research have consistently shown materialistic goals – acquiring wealth and possessions for reasons associated with image and status – undermine wellbeing.

This is because materialistic striving is often borne out of low self-esteem or tending to compare oneself negatively to others, and there is always someone else to compare yourself against.

People can get stuck on the “hedonic treadmill”, where they get used to their new level of wealth and the luxuries it provides and then need more to feel happy.

It’s also because the work needed to acquire that wealth can mean less time focusing on hobbies and with loved ones.

Harvard research tracking two generations of men and their children over their lives, going back to 1938, shows deep, meaningful relationships with others are key to mental and physical wellbeing.

American psychologist Abraham Maslow developed a “hierarchy” of people’s “needs” in 1943. This suggested “self-actualisation” – reaching your pinnacle of personal growth – starts by having enough money to cover the basics of food, shelter, and access to the opportunities needed to grow as a person.

In line with this, research has shown “time affluence” (maximising free time by paying people to do things you don’t want to) and “experiential buying” (for example, meals out with loved ones, going on holidays) can support wellbeing by helping people develop new skills, build relationships, and create lifelong memories.

It’s in most of our interests to close the wealth gap

Recent data shows economic inequality in Australia is increasing. This is particularly affecting young Australians, as housing becomes less affordable.

At a broader social level, research from the UK indicates that as inequality increases, social outcomes get worse. These include increased crime, drug and alcohol abuse, obesity as people struggle to afford nutritious food, and reductions in social trust.

What percentage of wealth do you think is owned by the richest 20% of Australians? And in your ideal Australia, how much wealth should the richest 20% own?

The most recent Bureau of Statistics data we have, from 2019-20, showed the richest 20% of Australians owned around 62% of our wealth.

As inequality gets worse, evidence suggests it will lead to social problems that threaten to undermine the wellbeing of the whole community.

The irony is those who pursue extreme wealth and benefit most from this inequality will not necessarily be happier or more fulfilled because of it.

Brad Elphinstone, Lecturer in psychology, Swinburne University of Technology

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

Money

France receives lowest credit rating due to crisis

France’s credit rating downgraded to record low amid political and fiscal crisis, raising concerns over debt and stability

Published

4 days ago

September 13, 2025

Ahron Young

France’s credit rating downgraded to record low amid political and fiscal crisis, raising concerns over debt and stability

In Short:
– Fitch Ratings downgraded France’s credit rating to A+, citing political instability and fiscal challenges.
– New Prime Minister Lecornu must secure budget approval amidst rising deficit and potential no-confidence vote.

Fitch Ratings has downgraded France’s credit rating from AA- to A+, the lowest ever recorded, amid ongoing political and fiscal challenges.

The decision comes shortly after Prime Minister François Bayrou was removed in a vote of no confidence regarding his €44 billion austerity plan.

President Emmanuel Macron has appointed Sébastien Lecornu as the new prime minister, marking the fifth leadership change in under two years.

Fitch highlighted political instability as a key factor undermining fiscal reforms, with France’s debt now at €3.3 trillion, or 113.9% of GDP.

The budget deficit increased to 5.8% of GDP and is expected to rise, posing challenges ahead.

Political Instability

The new prime minister faces a divided parliament and must secure budget approval by October 7.

The far-left plans a no-confidence vote against Lecornu, complicating further cooperation on legislative reforms, with S&P Global hinting at a potential downgrade.