Richard Branson, the billionaire entrepreneur and founder of the Virgin Group, has called on the UK government to consider his airline’s application for a bailout favorably. In an open letter to employees, Branson said Virgin Atlantic would not survive without help and has even offered his private island, Necker Island, as collateral against a loan.
Island as collateral
Billionaire founder of the Virgin Group, which includes Virgin Atlantic, has renewed calls for a government bailout for his struggling UK airline. Previously, Virgin Atlantic had applied for a £500m ($622m) bailout from the British government. Although the official outcome has not yet been revealed, it is thought that the decision is moving towards a rejection.
In a bid to instill some confidence in the viability of the airline, Branson has made the government an offer it cannot refuse, or so he hopes. The British Virgin Islands-based tycoon has today offered his own private island, Necker Island, as collateral against a government loan. His post said,
“There have been comments about my home. Joan and I did not leave Britain for tax reasons but for our love of the beautiful British Virgin Islands and in particular Necker Island … As with other Virgin assets, our team will raise as much money against the island as possible to save as many jobs as possible around the Group.”
Branson goes on to remind the public that his airline is not asking for a handout. He states that,
“… we will do everything we can to keep the airline going – but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for. This would be in the form of a commercial loan – it wouldn’t be free money and the airline would pay it back (as easyJet will do for the £600m loan the government recently gave them).”
That last remark clearly contains a little bit of a barb. The governmental ruling on easyJet’s bailout was made fast, and while Virgin Atlantic continues to wait for a decision, the airline’s future becomes ever more precarious.
Could Branson use his own money?
There have been repeated accusations in the media suggesting that Branson should stick his own hand in his pocket and bail out his airline. However, the billionaire suggests that his net worth does not present an accurate picture of his overall financial standing. He post states that, while the headline figures look good, he doesn’t have loads of ready cash in the bank. He says,
“I’ve seen lots of comments about my net worth – but that is calculated on the value of Virgin businesses around the world before this crisis, not sitting as cash in a bank account ready to withdraw.
“The challenge right now is that there is no money coming in and lots going out.”
The founder has already committed a quarter of a billion dollars to support its businesses through the crisis. While the details of this have not been made public, it is thought that around £100,000 ($125k) will be headed for Virgin Atlantic.
— Richard Branson (@richardbranson) April 20, 2020
Branson also nods to his Australian airline, Virgin Australia, which has recently been rejected for a bailout of AUD $1bn (approx. $890m). He says,
“… the brilliant Virgin Australia team is fighting to survive and need support to get through this catastrophic global crisis. We are hopeful that Virgin Australia can emerge stronger than ever, as a more sustainable, financially viable airline. If Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies. We all know what that would lead to.”
Unfortunately, with news coming in that Virgin Australia will enter voluntary administration later today, the chances of it emerging ‘stronger than ever’ look increasingly unlikely. Let’s hope that assistance for the UK arm of Virgin’s aviation brand gets the support it needs in time to avoid a similar fate.
What do you think about Branson’s offer? Should the government bail out Virgin Atlantic now? Let us know in the comments.