Virgin Australia boss Paul Scurrah has given his clearest indication yet that the airline intends to retain a majority stake in Velocity, the airline's frequent flyer program, even as it weighs a float of the lucrative loyalty business.
While a straight sale to another industry player or private equity firm has been touted as a likely outcome, sources said Virgin is also exploring the possibility of an IPO for Velocity.Under such a scenario, Virgin could reduce its holding but keep a controlling stake, while giving the market the ability to ascribe a fair value to Velocity as a separate entity.
"We have always and will continue to focus on ensuring that the program delivers really good results for our business and our members as well," he said.I wouldn't be selling it... Once you've sold it, it ain't there anymore.There are a number of paths open to the airline, ranging from selling its stake, to buying Affinity’s stake, or part of either options.
Based on a total value for Velocity of roughly $1.5 billion, Affinity Partners' stake would now be worth around $525 million, compared with the $336 million it paid in 2014.