Virgin America filed for an initial public offering Monday, setting up a Wall Street debut for the Bay Area-based airline carrier and adding yet another big-dollar deal to what is already a record-breaking year of IPOs.
While still a relatively small player when compared to colossuses such as United and American, Virgin America — which operates out of the Los Angeles and San Francisco airports — has edged its way into the hypercompetitive airline industry by offering passengers a variety of perks without charging a huge premium. It also sells direct flights to the East Coast, making the carrier a popular choice among business professionals who regularly travel from Silicon Valley to New York, Washington, D.C. and other cities.
Virgin became profitable last year, netting more than $10 million, according to financial filings. Its revenue increased about 6.9 percent from 2012 to 2013, and was up slightly — $12 million — in the first quarter from the same period a year ago. Last year, it carried 6.3 million passengers, less than one percent of the total number of passengers that flew on U.S. airlines.
The company did not say how many shares it plans to sell and offered a placeholder estimate of $115 million to raise during the IPO, although that number will likely change. Companies can announce pricing within 21 days of filing for an IPO, although there is not a deadline to begin trading.
Virgin’s timing means it may join what is expected to be a smoldering fall season for IPOs, when China-based internet giant Alibaba is expected to go public on the New York Stock Exchange in possibly the largest tech IPO in history.
Virgin’s announcement also underscores the widely held sentiment among companies that 2014 is an excellent time to take the IPO plunge. Despite a brief market freeze in April, the IPO market has been on a surge this year, with monster deals such as San Mateo sports-camera maker GoPro, which in June raised more than $427.2 million. The second quarter of this year saw the most IPOs of any quarter in the last decade — a total of 91 companies debuted on the public stock markets, up from 62 IPOs during the same quarter last year and 33 in 2012, according to research and consulting firm Ernst & Young.
Virgin America, which was founded in 2004, licenses the Virgin brand name from the Virgin Group, founded by businessman Sir Richard Branson. It flies to 22 airports in the United States and Mexico and has a fleet of 53 planes.