Residents can also expect a slight increase in temperature today
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Bangalore — Shares of Virgin America, a low-cost airline partly owned by Richard Branson, soared more than 30 per cent in their market debut, underscoring the buoyant mood in an industry that is emerging from a long spell of turbulence.
US airline stocks hit a 13-year high last week as they gained momentum from lower oil prices and increased travel spending by Americans in an improving economy.
The company’s IPO is the first for a US airline since May 2011, when Spirit Airlines went public.
Shares of Virgin America closed $7 above their IPO price of $23 on the Nasdaq on Friday. They touched a high of $31.18 earlier in the session, valuing the company at about $1.35 billion.
“Shares are probably trading a little higher than we expected, but we did expect an opening day pop,” Virgin America chief executive David Cush told Reuters. At the high, the stock was trading 8.08 times 2013 earnings, compared with Southwest Airlines’ multiple of 37.43 and JetBlue Airways’ 24.43.
“I think it’s a buy-and-hold story,” said Josef Schuster, founder of IPO investment firm Ipox Schuster.
Virgin America is the US offshoot of Branson’s London-based Virgin Group, which is involved in sectors including airlines, railroads, telecommunications, media and hospitality. The offering of 13.3 million shares, priced at $23 each, raised about $307 million, with the company retaining most of the proceeds.
Branson controls 24.8 per cent of the company, while hedge fund Cyrus Capital Partners is the biggest shareholder with a 32.8 per cent stake. The airline, popular among travellers as it offers Wi-Fi, comfortable leather seats and mood lighting, has been named the best US domestic airline by Conde Nast Traveler Magazine for the past seven years.
Residents can also expect a slight increase in temperature today
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