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.
Write to Ross Kelly at ross.kelly@wsj.com
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