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Virgin America Inc., the airline backed by billionaire Richard Branson, raised almost $307 million in its U.S. initial public offering, pricing the shares within the marketed range.
The carrier and an employee stock vehicle sold 13.3 million shares for $23 each, according to data compiled by Bloomberg, after offering them for $21 to $24. PAR Investment Partners LP agreed to purchase $52.1 million worth of shares in a private placement concurrent with the offering, according to the prospectus.
Virgin America, based in Burlingame, California, began flights in August 2007 and is the first IPO by a U.S. airline in three years. It’s going public with jet-fuel prices near the lowest since 2010 and airline stocks that reached a 13-year high this week. The shares will start trading tomorrow, listed on the Nasdaq Stock Market under the symbol VA.
Founder Branson’s Virgin Group Ltd. will own about 25 percent of the company after the IPO, the prospectus shows, while Cyrus Capital Partners LP, a New York-based investment adviser, will hold about 33 percent.
Virgin America operates in the U.S. and Mexico among large cities including New York, San Francisco, Chicago and Dallas, and tourist destinations like Las Vegas, San Diego and Puerto Vallarta, Mexico.
While it promotes lower fares, it’s not a no-frills discounter, and has adopted the mood lighting and in-flight entertainment that Branson uses to impart a sense of trendy style to his Virgin Atlantic airline. Virgin America’s won numerous awards, with fleetwide Wi-Fi and seatback video touch screens for entertainment options and on-demand snacks and drinks.
“It’s definitely a little hipper, a little cooler,” said Pat Morris, CEO of Hagin Investment Management, which oversees $100 million in assets. “They try to position themselves as not a luxury brand, but definitely upper middle market type of customer.”
Virgin America faces tough competition on cross-country routes where larger rivals American Airlines Group Inc., United Continental Holdings Inc. and Delta Air Lines Inc. have all upgraded their premium cabins with lie-flat seats, and JetBlue Airways Corp. began selling its only first-class cabin this year.
Barclays Plc and Deutsche Bank AG managed the offering.
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