Virgin America, the young airline known for its amenities and customer service but which has only recently turned a profit, went public on Friday. And early trading showed that the airline industry’s latest IPO appears to be a success.
While the offering price for shares was $23, the stock began trading on Nasdaq at $27, a 17.4% pop,. And shares had crept even higher by late morning, jumping almost 30% to $29.74. The average gain or “pop” for companies on their first day of trading this year has been 13% according to Renaissance Capital.
Virgin America, which counts British billionaire Richard Branson as a minority stakeholder, picked an ideal time to go public, with stocks across the board near or at all time highs.
The San Francisco-based airline began flying in 2007, just before the airline industry was rocked by sky-high fuel prices and diminished travel demand in the wake of a global recession. Despite its sleek cabins, and strong customer reviews, the airline has faced fierce competition from larger carriers who offer more flights and routes, and it failed to make a profit for six years.
But recently Virgin America has begun to mirror its larger network peers and make money .It saw profits three quarters in a row last year, ending 2013 with a full year profit of $13 million. And in the third quarter of this year, the carrier posted a profit of $41.6 million.