British billionaire Richard Branson said his airlines in the U.K. 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 Monday he’s doing everything possible to keep Crawley, England-based Virgin Atlantic Airways Ltd. going, but that it needs a U.K.-backed loan to ride out the crisis. Virgin Australia Holdings Ltd. is meanwhile “fighting to survive,” he said in a letter to staff posted online. Branson also said he would offer his Necker Island estate in the Caribbean as collateral.
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, which has led him to be viewed as a tax exile. Group companies pay taxes in the countries where they are based and operate, and more than 70,000 people work in Virgin operations across 35 nations, according to the letter.
Britain has yet to decide on Virgin Atlantic’s weeks-old application for hundreds of millions of pounds in support. The government has asked the airline to provide details of its efforts to seek private-sector funding and hired Morgan Stanley to assess its profitability, viability and contribution to the U.K. economy, according to people with knowledge of the matter.
Virgin Atlantic in turn says it has engaged U.S. bank Houlihan Lokey to ensure that its exploring all non-state funding options.
“We are continuing to work closely with the sector and are willing to consider the situation of individual firms, so long as all other government schemes have been explored and all commercial options exhausted, including raising capital from existing investors,” the U.K. Department for Transport said in a statement.
Morgan Stanley declined to comment.
Government Snub
Virgin Australia’s meanwhile appears dire, with the carrier told by the government in Canberra on Monday that it will receive no further financial help, the Australian Financial Review reported. The airline’s board will meet late Monday with little option but to hand the company over to administrators, the newspaper reported.
Branson, who is worth about $6 billion according to the Bloomberg Billionaires Index, said in his letter 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. The 69-year-old mogul has chosen instead to plow money into businesses such as Virgin Galactic Holdings Inc., his 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.