Virgin Australia says it has decided not to privatise the airline, but will deliver relief to long-suffering minority investors by buying up thousands of shareholdings too small for them to sell.
The carrier's chairman Elizabeth Bryan flagged at its annual general meeting in November that its board was considering whether to privatise the company, which is 90 per cent controlled by five major investors.
Virgin will buy out its smaller shareholders.
Ms Bryan said on Thursday that following discussions with its major shareholders - Etihad Airways, Singapore Airlines, HNA Group, Nanshan Group and Richard Branson's Virgin Group - the board had decided again privatising.
However, Virgin will offer a buyback to the roughly 21,000 of Virgin's 38,000 investors whose shareholdings are worth less than $500 and unmarketable.
"This facility will give those shareholders the ability to sell their shares at an appropriate price and in a convenient, cost effective manner," Ms Bryan said.
The buyback will be at a price of 30¢ per share. The stock closed at 26¢ on Wednesday, and has rallied from about 19¢ in November on speculation a privatisation bid was imminent.
The total value of unmarketable parcels is about $5 million, making up 0.2 per cent of issued capital.
Investors can opt out of the buyback.
Back in black
The airline on Thursday said it had swung back into the black, posting a $4.4 million after-tax profit for the first half off the back of strong passenger growth and rising ticket prices.
The result is a 120 per cent improvement from the same half last year, when the airline ran at a $21.5 million loss
Without the cost of the its business turnaround plan, including removing older aircraft from its fleet, Virgin ran at an underlying profit before tax of $102.5 million, up from $42.3 million in the first half last year.
“The improvement was driven by a number of factors including unit revenue and passenger growth, capacity and network optimisation and further progress in implementing the Better Business program,” chief executive John Borghetti said.
Earnings before interest and tax from Virgin’s domestic operations grew to $153 million from $80 million as it phased out older aircraft and attracted more business travellers, while its international arm earned $1.4 million, up from $800,000 last year.
Fares increased 3.2 per cent and 3.4 per cent respectively.
However its Velocity loyalty business saw a $9.8 million decline in earnings to $56.8 million, after new rules limiting credit card fees hit its revenue.
Mr Borghetti said he expected the airline was on a positive performance trajectory, and expected better underlying earnings in the second half of the year compared to in 2017, but did not give guidance.
Virgin has reported full-year net losses every year since 2012, and Tuesday's result is one of only three half-year profits over the same period.
Virgin also announced the launch of a second route into Greater China, with daily flights between Sydney and Hong Kong to commence in the middle of this year.
The new route would build on the success of its Melbourne to Hong Kong service launched in July last year, Mr Borghetti said.
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