Datalex shares rise on Virgin Australia deal

Shares in the Dermot Desmond-backed travel software company, Datalex, rose more than 5 per cent on Monday after it announced a deal with Virgin Australia, which stockbrokers said was its “first meaningful customer win” in three years.

Virgin Australia, which was bought out of administration last year by Bain Capital, is overhauling its IT platforms and has signed on to use all four of Datalex’s main software products, such as its systems to boost retail sales and marketing.

The Irish company announced the deal on the stock market on Monday morning, sparking a strong rise in its share price, which was about 84 cents by mid-afternoon.

Stockbroking firm Davy said in a note to clients that the deal with Virgin Australia implied the company now had “momentum” and was on a “firmer financial footing than at any point” over the past three years. It said the deal would require net investment from Datalex in 2022 but would bear fruit in the medium term.

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Datalex has endured a troubled period after the fallout of an accounting scandal and also a major dispute with Lufthansa caused it to run out of cash, with Mr Desmond bailing it out with loans of more than €11 million in 2019.

Earlier this year, Datalex sold close to €25 million in shares to pay back the loans plus interest to Mr Desmond of about €16 million, with the rest to be used to fund working capital.

After the equity raise, Mr Desmond’s share has risen to close to 40 per cent, above the 30 per cent at which he ordinarily would be obliged to mount an offer for the whole business. However, a waiver for this was provided by the Takeover Panel.

Datalex recently announced it was awarded €823,000 from Lufthansa in arbitration, but the companies remain in dispute in lawsuits and countersuits in Germany over the 2019 falling out.

Datalex’s revenues last year slid 38 per cent to $28.1 million (€24.9 million), as its airline customers pulled back on investment in the teeth of the pandemic.