It is hard to say ‘ag shame’ as Virgin flies into Covid storm – The Wall Street Journal

The owner of the Virgin Group, billionaire Richard Branson's call for a UK government loan to keep his airline Virgin Atlantic afloat has been met with derision in his home country with some suggesting he should sell his private island to make up for his staff wages. A decision to force his airline's staff to take a pay cut and unpaid leave and a recent High Court battle to sue the country's National Health Service, that is so central to fighting the coronavirus pandemic in the UK for an £82m contract, which he won, have also not endeared him to the Brits. Branson is a well-known face in South Africa as he owns a private game reserve within the Sabi Sand Reserve in the Lowveld and has recently launched a Centre of Entrepreneurship in South Africa. But the lack of diversity in a photo that Branson tweeted with a lily white team at the opening of the centre got him in to trouble locally as well. Branson apologised for the tweet and later posted a slightly more diverse group of people. When the businesses of billionaires who own tropical islands, game reserves and have ventures that can send people into space run into trouble; it is hard to find an 'ag shame'. As governments have to dig deep into their treasure chests for extra funds to help those in distress during the Covid-19 outbreak, can the Richard Branson's of this world expect sympathy. The Wall Street Journal charts how Branson's empire is sailing into a "meltdown" during the Covid-19 pandemic. – Linda van Tilburg.Richard Branson fights to save travel, tourism empire.By Benjamin Katz and Alistair MacDonald.(The Wall Street Journal) – LONDON—Two months ago, Richard Branson launched the Scarlet Lady, the first cruise ship in a globe-spanning travel and tourism empire bearing his Virgin Group brand..___STEADY_PAYWALL___.Today, the cruise ship business is on hold. One of his airlines, Virgin Australia, filed for bankruptcy Tuesday. Another, Virgin Atlantic, the high-profile trans-Atlantic shuttle, is asking for financial assistance from the UK government..Mr. Branson, 69 years old, became one of Britain's best-known billionaires by putting his Virgin brand on an array of businesses, including planes and trains, cola and bridal gowns, often taking an equity stake and licensing fees in exchange. Several of his biggest forays are focused on travel and tourism. Amid the new coronavirus pandemic, he now finds himself at the epi-centre of the meltdown in those industries. "This is the moment of truth" for Mr. Branson, said Tom Bower, an author who has written a book about him..Mr. Branson's reversal of fortune is emblematic of the pandemic's ferocious economic repercussions. His flagship venture, Virgin Atlantic, was poised this year to turn its first profit since 2016, according to a spokeswoman for the airline. Because of his unique business model—based in large part on his own high-profile, personal branding—he has become a poster child for what can go wrong in the pandemic era..Late last year, Mr. Branson listed his Virgin Galactic Holdings, a space tourism venture, on the New York Stock Exchange. But for decades, Mr. Branson has been the public face of his Virgin-branded airlines. First among them was Virgin Atlantic, which marketed itself to high-end travellers between the US and Europe with its "upper class" cabin. The pandemic has ravaged the airline industry in recent months. The sector is expecting $314bn in lost revenue, far outstripping the impact from the 9/11 attacks in 2001, according to the International Air Transport Association, a trade body..Amid the carnage, Mr. Branson this week said he planned to borrow money against his private island in the British Virgin Islands to save jobs at his portfolio companies. He bought the island when he was 29. "Over the five decades I have been in business, this is the most challenging time we have ever faced," he wrote in a letter to his employees, posted on his group's website..In the letter, he pleaded for state aid from the Australian and UK governments to help his airlines weather a collapse in bookings and tight travel bans instituted by many countries to slow the pandemic. Addressing criticism from UK lawmakers that Mr. Branson himself should be the one bailing out his company, he said his own net worth 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.".Mr. Branson's net worth is estimated at around £3bn to £3.5bn ($3.7bn to $4.3bn), according to a Virgin spokesman. The spokesman said Mr. Branson was using his assets to raise funds, including the plan to take out a loan against his island. He has also liquidated a number of financial instruments and holdings, the spokesman said..On Tuesday, Virgin Australia entered bankruptcy administration after lawmakers there refused financial aid. They cited the airline's large foreign ownership. Virgin owns 10% of the carrier, Australia's second-largest after Qantas Airways. The other 90% is owned by foreign airlines like Abu Dhabi's Etihad Airways, Singapore Airlines and Chinese conglomerate HNA Group Co. The carrier employs more than 10,000 staff and controls just under a third of the domestic market. Its sister carrier, UK-based Virgin Atlantic, is 51% owned by Virgin Group, based in the British Virgin Islands, and 49% owned by Delta Air Lines. It is asking for financial assistance from the UK government to stay afloat. Virgin Atlantic has been a thorn in the side of flag carrier British Airways since its formation in the 1980s..Like many airlines, the coronavirus has wiped out its ability to operate. It has grounded about 85% of its fleet. Last week, it was operating a handful of passenger flights. This week, its only flights were for moving cargo. Virgin Atlantic has been the most vocal of Britain's carriers in calling for the government to step in and bolster the industry. The UK has balked, saying a rescue was a last resort and should follow efforts to secure fresh cash from existing investors. A Virgin Atlantic spokeswoman said talks over funding were "ongoing" and "positive." with a decision due to be made by the government early next month. Delta said it "remains supportive of our partner airlines and their efforts to gain needed financial support.".Though not Britain's richest businessman, Mr. Branson is among those with the highest profile. He left his private school at 16 and set up a magazine called "Student," using it to sell vinyl records in what would be the start of his first big business, the Virgin Records chain of stores, and then music label. When Mr. Branson moved into airlines and tourism, the long-haired and goateed businessman became a key part of the brand. He courted media coverage for his businesses through a series of high-profile stunts, including a hot-air balloon ride across the Atlantic in 1987. Mr. Branson eschewed suits, wearing jeans and casual shirts, and the country warmed to him.."He was the cheeky chappie, the antiestablishment man who won over people who did not like the establishment," said Mr. Bower, the biographer..Mr. Branson also has courted celebrities and well-known politicians at his parties and at his Caribbean island. Former President Barack Obama visited soon after he left the White House, and was photographed kite surfing with Mr. Branson..Christian Stadler, a professor of strategic management at Warwick Business School, describes Mr. Branson's business model as being most like that of a venture-capital fund. But private-equity firms "put money into companies and see how they go," he said. Mr. Branson, he added, "doesn't put money into his ventures.".A spokesman for Mr. Branson disputed that, saying: "Virgin and Richard have taken big bets on businesses and invested substantial dollars.".Mr. Branson often effectively leases out his Virgin brand name to businesses, taking a fee or equity stake for doing so..Mr. Branson has started more than 400 companies, including over 60 current businesses, according to the website of Virgin Group. These Virgin companies include more than 71,000 employees in 35 countries and generate $24bn in annual revenue, it says. News Corp, the owner of The Wall Street Journal, has a commercial arrangement with Virgin Group licensing its Virgin Radio brand..The cruise business was one of Mr. Branson's most recent ventures. The Scarlet Lady was set to make its first voyage from Miami to the Caribbean in April, in a business that Mr. Branson said he had dreamed of entering since his 20s. Now, that ship is sitting off the coast of Florida, joining hundreds of other cruise vessels currently idled by the coronavirus..– Write to Benjamin Katz at ben.katz@wsj.com and Alistair MacDonald at alistair.macdonald@wsj.com.

It is hard to say ‘ag shame’ as Virgin flies into Covid storm – The Wall Street Journal

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