Richard Branson offers Caribbean island to secure Virgin bailout

LONDON: Billionaire businessman Sir Richard Branson has pledged his luxury island resort as collateral to help secure a UK government bailout for his Virgin Atlantic airline.

The Virgin Group boss said in an open letter to staff he was not asking for a handout, but a commercial loan, believed to be £500m. He said the airline’s survival was in doubt, and his Necker Island home in the Caribbean could be mortgaged.

This comes as Virgin Group’s airline in Australia enters voluntary administration, making it the country’s first big corporate casualty of the coronavirus pandemic. The carrier cut almost all flights last month following widespread travel bans.

Both airlines have been hit hard by the global coronavirus lockdown, and Branson has appealed to governments in both countries for help. He is the 312th richest person in the world with an estimated $5.2bn fortune.

Branson said in his letter to staff: “Many airlines around the world need government support and many have already received it.” The crisis facing airlines, and the staff they employ, was “unprecedented,” he said.

He said Necker would be offered as security for any loans. “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,” Sir Richard said.

In his letter to staff, Branson said: “We will do everything we can to keep the airline [Virgin Atlantic] 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).”

An open letter to Virgin employees https://t.co/Nv1RLBhp3j pic.twitter.com/Qj16CUT5N0

— Richard Branson (@richardbranson) April 20, 2020

He pointed out that Virgin Atlantic started with one plane 36 years ago, before adding: “Over those years it has created real competition for British Airways, which must remain fierce for the benefit of our wonderful customers and the public at large.”

The Australian government offered some support, but refused a request from the company for a A$1.4bn (£720m) loan. The airline is part-owned by Sir Richard along with Etihad, Singapore Airlines and China’s HNA.

“The brilliant Virgin Australia team is fighting to survive and need support to get through this catastrophic global crisis,” Branson said. “We are hopeful that Virgin Australia can emerge stronger than ever, as a more sustainable, financially viable airline.”

He warned: “If Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies. We all know what that would lead to.”

Branson addressed the fierce criticism he has faced in recent weeks over his tax situation. He has been criticised for paying no UK income tax since moving to the tax-free British Virgin Islands fourteen years ago.