Is this the right time for Virgin America to go public?

Virgin America is a low cost airline with a good reputation among its customers. In fact, Consumer Reports put the company at the top of the list in customer satisfaction when it rated airlines in 2013, saying that the airline had received, “some of the highest customer satisfaction scores any airline has in years.” Everyone loves a company that succeeds while doing the right thing by its customers, rather than pinching them for every penny and cutting back on services, but with Virgin America now set to go public, a number of potential PR issues loom.

Most obviously, there was the recent crash of a Virgin Galactic prototype space-tourism rocket which resulted in the death of the flight's co-pilot, Mike Alsbury. The two companies are not the same, but they are both part of the Virgin Group headed by billionaire Richard Branson. The Virgin Group holds only a minority stake in Virgin America, meaning that it does not have a controlling interest in the company, but the distinction may not matter to investors who are considering whether they want to buy into an airline IPO, which tend to carry high risk under any circumstances, when the name of the airline is one associated so recently with a fatal crash.

Then there is the proposed ticker symbol, VA. It's a perfectly respectable pairing of letters, as we in Virginia know, but it also stands for Veterans Affairs, a Federal department that seems, for whatever reason, to have failed to adequately serve America's veterans, casting shame on us all in the process. The scandal has been around for a while, but fresh revelations continue to emerge, and it can't be to Virgin America's benefit to have so much ugliness pop-up every time someone does a google search for its ticker.

Lastly, for those who pay attention to this sort of thing, there is the whiff here of the modern stock market trend of benefitting those at the highest levels more than others. The company's chief executive C. David Cush has said he is hoping to raise $300 million in the IPO and use it to promote employee loyalty. He further indicated that employees would be able to buy shares “at the same price, and at the same time, as Wall Street,” although it isn't clear whether that means customers can get the shares at the IPO price. (If they can, why wouldn't he say that?)

The company is indicating that it is doing its workers a favor by allowing them to give the company money for stock, at what will, presumably, be some sort of favorable terms. That's great, but it isn't quite as great as if they raised money from the Street and actually used it to pay their employees. Those who aren't paying attention to this sort of thing should be, as the apparently contagious allergy towards paying higher wages is clearly among the greatest remaining obstacles standing between the ho-hum economy of today and true prosperity. 

Julian Close has been a business writer since the first day of the twenty-first century, having written for PRA International and the United Nations Department of Peacekeeping. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. He became a stockbroker in 1993, but now works for Fresh Brewed Media and uses his powers only for good. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.

Julian Close

Julian Close

Julian Close became a stockbroker in 1995. In his 20 years of market experience, he has seen all market conditions and written about every aspect of investing. Julian has also written extensively on corporate best practices and even written reports for the United Nations. He graduated from Davidson College in 1993 and received a Master of Arts in Teaching from Mary Baldwin College in 2011. You can see closing trades for all Julian's long and short positions and track his long term performance via twitter: @JulianClose_MIC.

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