the global investor
Virgin Atlantic Bailout
Written By Rebecca Maguire
W
hile the world is in the grips of a global pandemic, government-funded bail-outs have become an essential tent-pole to keep businesses, small and large, above water. The reactions to said bail-outs have been broadly positive, with many deeming them both justified and economically viable; however public opinion has been divided in the case of Virgin Group’s subsidiary, Virgin Atlantic. When news broke of founder Sir Richard Branson’s plea for financial aid from the UK government, backlash immediately ensued with many begging the question...why? Branson’s current net worth is estimated at 4.4 billion dollars, and Virgin Atlantic alone has 1.886 billion pounds 94
worth of assets as of 2018. Not only has Branson’s Twitter account been awash with criticism, he has drawn the ire of parties as wide and varied as The Guardian, who published a letter branding him “shameless”, as well as fellow business magnates Simon Cowell and Duncan Bannatyne. Chief among these criticisms is one question, why can’t Branson bail out Virgin Atlantic from his own pocket? Although Branson is a majority stakeholder in Virgin Atlantic, that majority is minuscule. 51% is owned by Branson, while the other 49% was acquired by the US airline Delta in December 2012. It is unclear as to whether Branson consulted with Delta before making an appeal to the UK government, however it would make little financial sense for him to personally bail-out a company of
which he owns little more than half. Perhaps a refusal by Delta to match a hypothetical personal contribution could have forced Branson into seeking state aid? Furthermore, it has been reported by the Financial Times that Branson has been seeking prospective investors for the airline via investment bank Houlihan Lokey, which could provide the financial aid it would need without requiring government funds. However, after attempts to secure private investment were deemed unsuccessful by Branson, applications for state aid went ahead, as more governments closed borders and instated travel bans. Though Branson reportedly offered his ultra-luxury private resort, Necker Island, as collateral during talks for state aid; his bid was nonetheless
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