British billionaire Richard Branson said his airlines in the UK and Australia won’t survive the coronavirus crisis without state support, and that his Virgin Group lacks the resources to see them through the pandemic.
Branson said in a letter to staff Monday posted online that he’s doing everything possible to keep Virgin Atlantic Airways Ltd. going. It needs a UK-backed commercial loan to ride out the crisis, while Virgin Australia is “fighting to survive,” he said.
The entrepreneur is struggling to convince governments to rescue his brands given his own highly visible wealth and long-time residency in the West Indies that’s led him to be viewed as a tax exile. The companies pay taxes in the countries where they are based and operate, and more than 70 000 people work in Virgin operations across 35 countries, according to the letter.
Britain has yet to decide on Virgin Atlantic’s weeks-old application for hundreds of millions of pounds in support, while Virgin Australia Holdings Ltd. was told by the government in Canberra Monday that it will receive no further financial help, the Australian Financial Review reported.
Branson said he left Britain not for tax reasons “but for our love of the beautiful British Virgin Islands,” and that he has never taken significant profits out of Virgin Group. He’s chosen instead to plow money into new businesses, such as his latest Virgin Galactic Holdings Inc. space-tourism venture.
“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,” he said.
Branson has committed to injecting $250 million into his brands to save jobs, and he said in the letter that “a big part” is going to Virgin Atlantic.” But with “no money coming in and lots going out,” that in itself won’t be enough, he said.
Virgin Australia’s situation is the most critical, with debts of more than A$5 billion ($3.2 billion) at the end of 2019. Branson now holds only a 10% stake in the Brisbane-based carrier, compared with 51% of Virgin Atlantic.
Virgin Australia had asked the government for a A$1.4 billion loan, convertible into equity, to see it through the crisis. The is dominated by Qantas Airways Ltd. in essentially a two-player market, and hasn’t made an annual profit for seven years.
© 2020 Bloomberg