Virgin Australia shares surged 11.4% in its trading debut on Tuesday, lifting its market capitalisation to A$2.58 billion ($1.7 billion), with dealmakers hopeful it will revive Australia's subdued listings market.

Virgin Australia's shares have rallied by about 8 per cent as it has listed on the stock exchange five years after its collapse. The airline's initial public offering was priced at $2.90 per share, raising $439 million for the company.

Virgin shares began trading under the ticker code VGN at noon, hours after word of a likely ceasefire between Iran and Israel sent oil prices tumbling. “Until yesterday there were concerns the airline’s IPO was hitting the market at the wrong time, but the overnight action has changed everything,” Moomoo market strategist Michael McCarthy said.