for much of his enormous ly successful
business career Sir Richard Branson cut
a figure as a brash and rebellious
impresario who took on big businesses
with his larger-than-life personality
charm and sheer guts but in 2020 his
sparkling empire is taking hits on all
sides from a global pandemic and his
critics are casting him as another
billionaire seeking government bailouts
the Virgin Atlantic airline Branston
started and grew from an industry
underdog to a major international
carrier is now at risk of collapsing the
airline is asking for a 500 million
pound bailout from the UK government to
offset losses it is suffering as the
corona virus pandemic scares off
travelers and grounds planes on May 5th
Virgin Atlantic reportedly shut down
operations at London's Gatwick Airport
the smaller of the city's two airports
Gatwick has a kind of symbolic
importance to Virgin it was the first
hub the company flew out of the British
billionaire in April offered to mortgage
his private island in the Caribbean as
collateral to save the business
he also took steps to raise funds by
selling part of his stake in his space
travel business Virgin Galactic both the
request for the bailout and Branson's
Island offer have met with some
criticism and even a bit of mockery but
without new funding the airline is
facing the edge of a cliff airline
industry insiders worry that it might be
the end of an era for Virgin Atlantic
leaving flyers with less choice but the
trouble for Branson does not stop there
Virgin Atlantic's parent Virgin Group
has several other businesses and
industries that have all been hit hard
by the coronavirus including hotels gyms
and a fledgling cruise line the pandemic
is dealing a double blow people have
little use for plane flights and swanky
hotel stays as long as a contagious and
potentially fatal virus is sweeping
continents but it is also feared that
the pandemic will make customers nervous
and less willing to spend money for a
long time to come
owned by Branson and his family virgin
group calls itself a growth capital
investor the company has three branches
to its business there are the Virgin
branded companies the group has
significant stakes in such as Virgin
Atlantic converging hotels Branson has
also made unbranded investments in
industries such as technology and
alternative energy
finally companies license the Virgin
name for which Virgin told CNBC it gets
roughly 20 million dollars a year in
profit rich revenues given the
relatively low cost of Licensing a brand
about 70,000 people in 35 countries work
for companies that are either owned by
virgin or licensed the name and virgin
has a portfolio of investments that
cover an astonishing range of industries
its core businesses fall into several
categories Travel and Leisure telecoms
and media music and entertainment
financial services and health and
wellness included in this vast range of
industries are not only Airlines but
books cruises hotels gambling health
care space telecom trains home water
purification systems and even hot air
balloon flights
it is also invested in some high tech
ventures for example there is virgin or
banana satellite company which is
scheduled to make its first flight in
late May there's also Virgin Galactic a
sort of space travel company and
befitting a billionaire such as Branson
virgin also has a Hyperloop project
Virgin Atlantic is arguably one of the
group's most high-profile companies
Branson's family owns 51% of the airline
through Virgin Group and Branson has
called it one of my children in a
business with a lot of drama queens in
it Virgin Atlantic is the diva of the
Virgin Group
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Branson first ventured into the airline
business in 1984 the story is that he
was on his way to his Island to meet
with a lovely lady he hadn't seen in
weeks
when he heard his flight was canceled
and I was livid because I hadn't seen
him three so I went to the back of the
airport I heard a plane you know gave
them my credit card hoped hope that
hoped it wouldn't pants come forward a
black board wrote as a joke Virgin
Airlines one-way thirty-nine dollars to
the Virgin Islands went out to all the
people got bumped and I filled up my
first plane and then we arrived in the
VPI
somebody said sharpen up the service a
bit you could be an airline business
he later least one old 747 plane from
Boeing and began offering flights
Branson's idea was to bring some glamour
and flair to airline travel and for a
long time the brand was considered quite
innovative virgin was one of the first
airlines to target business class
customers it was one of the first to
offer sleep receipts and a Premium
Economy cabin there were in flight
massages and stylish airport lounges for
passengers that looked like something
out of a design magazine virgin called
its first-class cabin upper-class
high-priced tickets came with chauffer
services and other perks the idea
resonated with new classes of customers
improved disruptive to its larger older
competitors who often seemed rather drab
in comparison one of those incumbents
was British Airways whom virgin battled
fiercely over the years leaving behind a
trail of lawsuits and enmity between the
two companies in the 1990s British
Airways admitted in court its executives
had engaged in regrettable tactics meant
to undermine the upstart the brand was
personified by Branson the charismatic
entrepreneur and daredevil who had
gotten his start running youth magazines
and nurturing the careers of famous rock
bands such as The Sex Pistols as of 2020
Virgin Atlantic offered flights to
destinations all over the world but
getting there of course was not easy
Branson's various forays into air travel
have brought more than their fair share
of struggles and failures Virgin America
has been merged
Virgen ID you can Jiri a failed version
Express failed but the airline business
is brutally competitive its ruthless the
company merged its Virgin America
airline with Alaska Airlines in 2016 and
Alaska finished repainting all Virgin
America planes two years later erasing
the last traces of the venture virgin
had to scrap a small aircraft service in
the UK called little red virgin Express
an airline that provided shorter flights
throughout Europe merged with a
competitor efforts to establish a
presence in markets such as Nigeria have
been plagued by problems but the company
said Virgin Atlantic currently runs
routes to the country Virgin Atlantic
has so far managed to survive and even
thrive at times helped by partnerships
with other carriers Singapore Airlines
took a 49% stake in 1999 which it turned
over to American carrier Delta in 2012
that has allowed the two airlines to
coordinate schedules and prices and pool
revenues profits and operating expenses
without risking antitrust violations a
CEO named Craig Krieger had helped
stabilize the business and inject some
discipline running it say some analysts
more like a business and less like a
rich man's hobby by 2015 the airline had
flown 5.9 million passengers in a year
that number declined to 5.3 million by
2017 before rebounding slightly to 5.4
million in 2018 while it has a loyal
customer base and clever cheeky
marketing it is still a niche long-haul
airline competing with larger players in
recent years Virgin Atlantic also
appears to have scaled back its
ambitions recent moves to improve
financial fitness took away some of the
Flair that made the airline so unique
since it received the investment from
Delta the company has dropped many of
its routes around the world and
refocused on the North Atlantic
so Virgin Atlantic used to be very
innovative airline
they were among the first with live flat
seats they introduced these club houses
in seat entertainment but the airline
wasn't profitable and you know you can
give people great meals and great movies
but that if you're not making money
that's not a sustainable business model
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most recently the company entered into
an alliance called blue skies with Air
France and the Dutch airline KLM like
other airline alliances the plan is to
give passengers a wider array of choices
by connecting flights from different
carriers in the fiscal year 2018 the
most recent annual report available from
the company Virgin Atlantic's revenues
were up nearly 6% over the previous year
it still lost money about 32 million
dollars before taxes and exceptional
items according to May 20 28 that was an
improvement over the roughly 60 million
dollars again according to 2020 exchange
rates that the company lost in 2017
Virgin told CNBC the losses in part
resulted from hedges on fuel prices and
the effects of Briggs it on the British
Pound then the corona virus pandemic
struck and the entire airline industry
suffered a severe blow that has left
every major carrier grounding planes and
deeply short of money it was against
this backdrop that Branson and Virgin
asked the UK government for help
virgins layoffs at London's Gatwick
Airport affected more than 3,000
employees one-third of Virgin Atlantic's
total workforce Virgin Australia an
airline in which Virgin Group has a
small stake entered into voluntary
administration a financial status in
Australia similar to bankruptcy on April
21st Branson's request for a bailout
prompted mockery from some corners
especially in the British press a
particularly scathing article in the UK
newspaper The Guardian accused Branson
of not paying British income taxes in 14
years it also mentioned a successful
lawsuit Branson's Virgin health care
company had filed against Britain
National Health Service which is
publicly funded by taxpayers in a
response to the newspaper virgin's
communication officer Nicholas Fox said
that neither Branson nor Virgin have
quote ever taken a penny from the NHS
and that he has put 75 million pounds
into the program he added that if Virgin
Care ever became profitable it would
reinvest 100 percent of its profits into
the NHS he also said virgin companies
pay taxes in the countries where they
operate Branson moved his primary
residence to his private Necker Island
in the British Virgin Islands which does
not charge income taxes Branson is still
required to pay taxes on any income
earned in the UK Branson also said on a
blog post on April 20th that he moved to
Necker Island which he purchased in 1975
for health reasons and not to dodge
taxes on May 11th company filings
indicated Branson was preparing to sell
slightly more than 500 million dollars
worth of shares in his Virgin Galactic
business which is positioned as a space
travel and tourism company that offering
would represent just over 20% of
Branson's total stake in Virgin Galactic
which as of May 8th was valued at about
2.3 billion dollars what is clear is
that Virgin Atlantic needs cash Virgin
Atlantic told CNBC it is exploring all
available options to obtain more money
including private sector funding it is
taking actions to reduce costs preserve
cash and protect as many jobs as
possible the company is continuing to
have discussions with shareholders and
said the airline is in a stable position
Virgin Atlantic also flew 90 cargo
flights per week in the month of May
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Virgin Atlantic is just one of virgin
groups many companies and travel tourism
and other industries severely exposed
pandemic fallout we got to know exactly
how the Virgin Group is structured to
what extent bugs and cannot actually
transfer funds from some of these
activities to another there's talk with
the the group has it's a thumbing 400 or
so parties different business entities
that could you scope for moving money
around and what he actually wants to do
it I mean this airlines been losing
money now for last four or five years
when other airlines with making profit
eyes are closely watching the fate of
Virgin voyages the cruise line aimed at
upscale vacationers that virgin group
had announced it was building with
partner Bain Capital in December 2014
virgin voyages was intended to bring a
lot of the same edginess to the cruise
business that Brandt said hand injected
into Airlines decades earlier the cruise
lines guest cabins are referred to as
rockstar quarters - especially pricey
accommodations on the ship called
massive suites come complete with a
separate music room with electric
guitars amplifiers in a vinyl turntable
as well as a large outdoor terrace with
a hot tub dining table hammocks and
other private amenities for friends
family and groupies virgin voyages was
supposed to make its inaugural trip
through the Caribbean on April 1st the
maiden voyage on the lines Scarlet lady
cruise ship was delayed until August 7th
then there is Virgin Trains an intercity
rail business which ran for just over 20
years in the UK before being
discontinued in that country in 2019 in
2018 virgin group licensed its name to a
train line in Florida which is being
branded as Virgin Trains USA the only
privately owned intercity passenger rail
line in the US the company which is
heavily funded by fortress Investment
Group has plans to build another network
of rails connecting parts of Southern
California with Las Vegas the project
depends on cooperation with state
governments in California and Nevada and
Las Vegas economy which depends heavily
on tourism has been wrecked
by the spread of the coronavirus
Branson's Virgin Hotel chain is also
suffering setbacks from the virus in
early May the company filed a lawsuit
against the owner of its San Francisco
property after he said he planned to
terminate his 20-year contract with
virgin less than a year after the hotel
opened Virgin's boutique hotel chain had
been beset by years of delays already in
early 2020 there were three hotels in
operation virgin was set to open hotels
in New York Nashville and Las Vegas in
2020 New Orleans in Edinburgh Scotland
in 2021 Miami in 2023 and Palm Springs
in 2024 the company temporarily laid off
21 workers at its yet to open Nashville
Hotel on April 5th according to a
tennessee state government listing
virgin told CNBC it is still planning to
open its nashville hotel in 2020 the
dallas hotel is open on a limited basis
virgin group has suspended memberships
at its virgin active health clubs a
chain of premium gyms it operates in
several countries mainly in the UK
Europe Africa Asia and Australia the
company told CNBC that as of late May it
was beginning to reopen some of the
branches in Italy and of course virgin
won't be offering any hot air balloon
flights until July first virgin told
CNBC it expects Virgin Australia to
re-emerge from voluntary administration
it also said many of its investments in
Travel and Leisure are early-stage
long-term investments and the group has
the capital to develop them
the group does have other businesses
such as mobile phone service and mobile
payments that customers can use anywhere
even when they're sheltering in place in
2020 virgins struck a licensing deal
with Spanish telecom operator uske tell
it has stakes in telecom businesses
elsewhere in the world including a
partnership with Sprint in the u.s. it
also has a stake in a bank in the UK and
an employee health care service called
virgin pulse but virgin refers to itself
as a lifestyle brand and much of what it
sells is an experience in an identity
its customers can count on virgin to
bring a hip modern and playful aura to
hotel stays flights train rides and
trips to the gym it is also offering a
connection to Branson's own upscale
jet-setting image and cannot do that if
people are wary of leaving their homes
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