Virgin Australia has confirmed holding board-level discussions about privatising the airline, with chairwoman Elizabeth Bryan acknowledging for the first time the airline has explored privatisation options.
"The board has held discussions about privatisation, however there is no outcome to report to the market at this stage," Bryan admitted at the company's annual general meeting held today in Brisbane.
PREVIOUS | Rumours continue to swirl that Virgin Australia could be privatised before the end of 2018, in an effort to help the airline rebound from its lacklustre financial straits. But what exactly would privatisation mean, in this instance?
First up, privatisation would see the remaining 'free float' of shares in parent company Virgin Australia Holdings – the shares not held by the airline's largest corporate investors and available to change hands on the market – bought up.
Virgin's current web of ownership sees an estimated 8.6% of its stock earmarked as free float, according to Bloomberg data.
Etihad Airways and Singapore Airlines hold respective 21% and 20% stakes in the Qantas challenger; a further 40% is evenly split between China's HNA and Nanshan Group, while Sir Richard Branson's Virgin Group has another 10% in its corner.
That 8.6% slice could be brought back within the fold through a management buyout; by having existing shareholders increase their stakes under 'creep' provisions; or through one shareholder taking up a majority stake in the airline.
Any of those three measures would remove Virgin Australia from the ASX stock listing.
This in turn would prevent the need for public financial reports – which the airline currently files every three months – and provide Virgin with breathing space to execute its ongoing 'cutting the costs and flying back into profit' strategy without the running commentary and market scrutiny which comes from trading in the public eye.