Richard Branson could be part of Virgin Australia's rescue, reboot

Richard Branson once famously remarked "If you want to be a millionaire, start with a billion dollars and launch a new airline."

The entrepreneurial enfant terrible is still a billionaire, but is also prepared to chip in yet more millions to the airline he launched 20 years ago as Virgin Blue, and then helped relaunch 10 years later as Virgin Australia.

"We are determined to see Virgin Australia back up and running soon," Branson pledged at his Virgin.com website.

"We will work with Virgin Australia’s administrators and management team, with investors and with government to make this happen and create a stronger business ready to provide even more value to customers, competition to the market, stimulus to the economy, and jobs for our wonderful people."

Branson's Virgin Group, which owns 10% of Virgin Australia, is "willing to put up between $200 million and $250 million," according to The Australian Financial Review – but only on the proviso of support from the Federal Government, which has so far refused to stump up, prefering what Treasurer Josh Frydenberg calls a "market-led solution."

While other Virgin Australia shareholders are set to be wiped out by the airline's appointment of an administrator, Branson could well be part of the restructured Virgin Mk II which emerges from the hangar.

Branson has already committed to injecting almost $400 million to support his companies, with a large share going to Virgin Atlantic, for which he is petitioning the UK Government for a £500m loan to help it through the "devastating impact this pandemic continues to have."

The Treasury rejected the proposal, and told Virgin to explore other ways to raise cash before seeking state assistance – so Branson will mortgage his private  island in the Caribbean to raise money to help his embattled Virgin-branded businesses battered by the coronavirus crisis.

Island retreat

Necker Island has been Branson's personal fiefdom for 40 years, but the billionaire is now turning to his Caribbean hideaway for cash.

Branson wrote to staff on Monday saying he plans to "raise as much money against the island as possible" as the pandemic lays waste to industries where Virgin competes, including airlines, hotels and cruises.

Richard Branson's idyllic Necker Island retreat.

Branson, who is the UK’s seventh richest person with an estimated £4.7bn fortune, and has lived tax-free on Necker Island in the British Virgin Islands for the last 14 years, promised on Monday that he would “raise as much money against the island as possible to save as many jobs as possible”.

The move to put his own home on the line is also a result of the lukewarm response to his pleas for a government bailout of Virgin Atlantic.

Decades of media-friendly exploits, from attempts at world records to glitzy airline route launches to a bid to establish the world's first space-tourism company, have become a millstone as states balk at coming to the aid of one of the world's best-known entrepreneurs.

Billionaire backlash

Colouring that reluctance is Necker Island itself, with the British Virgin Islands retreat portrayed as nothing more than a tax haven by some UK politicians and newspapers.

Branson confronts the claim in his letter, saying he bought it age 29 because of his "love" of the island and not for tax reasons. Necker, which was originally uninhabited, isn't just a luxury home, he contends, but also is a business that employs 175 people.

Branson, who turns 70 in July, has been a resident on Necker since 2006, receiving guests including Princess Diana and Barack Obama. "He's very emotionally attached to the island," said Farhad Vladi, who rents and sells private islands and estimates Necker was worth more than $US100 million before a hurricane strike in 2017. "It's part of his family."

There's little sign, though, that the announcement regarding Necker and an appeal from Branson to help save thousands of jobs has changed many minds.

"Branson has not paid tax in this country for 14 years," British lawmaker Diane Abbott tweeted in response to his letter. "On no account should he get a taxpayer bailout, loan or otherwise."

Additional material by Bloomberg News

David Flynn

David Flynn is the Editor-in-Chief of Executive Traveller and a bit of a travel tragic with a weakness for good coffee, shopping and lychee martinis.