Ever-effusive Sir Richard Branson has revived the prospects that Australia's Virgin Blue will make an initial public offering (IPO) this year.

Branson, whose Virgin Group owns half of Virgin Blue, recently told reporters: "Virgin Blue is beating all expectations. I think it is one of the most profitable airlines in the world, and I would expect it to come to market in the next few months. I would be surprised if we haven't floated by the [northern] fall."

Australia's Patrick Corp, which also owns half of Virgin Blue, says it will honour as required any call to offer 5% of its shares, but it shows no change in its earlier coolness toward an IPO.

Analysts have warned that a 10% flotation - 5% each from Patrick and Branson - would be too small to attract serious investors. To overcome this, local media suggest that Virgin Blue might issue more shares to boost the size of an offering, but that too would require Patrick's consent. Investor reaction is also uncertain.

Virgin Blue's pre-tax profit for its financial year to March was A$158 million ($101 million), easily beating its target of A$100 million. But Virgin Blue could be hurt by the Qantas decision to redeploy more capacity from overseas to domestic routes.

Source: Airline Business