After begging a reluctant British govt for a bailout, Branson concluded selling shares in his orbital tourism venture, Virgin Galactic Holdings, would be the best way to go.
London: Richard Branson has spent decades cultivating an image as a daredevil entrepreneur, glorifying risk with stunts such as sky-diving or hot-air ballooning across the ocean to promote everything from soda to space travel. Now, less than a week shy of his 70th birthday gift, Branson is taking one of the biggest gambles ever to save his flagship airline from the ravages of the coronavirus outbreak.
With trans-Atlantic travel largely grounded for the foreseeable future, the company most responsible for building his global brand — Virgin Atlantic Airways Ltd. — was being pushed to the brink of collapse. After begging a reluctant British government for a bailout, Branson concluded his best option for raising money was to sell shares in Virgin Galactic Holdings Inc., the orbital tourism venture that has become his obsession in recent years.
On Tuesday, Virgin announced a 1.2 billion-pound ($1.5 billion) rescue package that includes about 170 million pounds from U.S. hedge fund Davidson Kempner Capital Management and 200 million pounds that Branson got from diluting his stake in Virgin Galactic.
“It’s the ticket to our continuing journey, and hopefully it also means a better birthday for Richard,” said Shai Weiss, Virgin Atlantic’s chief executive officer. “He’s put in 200 million, but we’ve helped wrap it up for him.”
Bitter blow
On March 24, when the news came through that U.K. Chancellor of the Exchequer Rishi Sunak had rejected an industry bailout, Branson was on Necker Island, the Caribbean redoubt from which he pilots his global empire. The decision came as a bitter blow, as Transport Secretary Grant Shapps had hinted he’d consider a rescue just days before.
After leaving open the possibility of a broader package, the government decided that only companies with investment-grade debt would be allowed to access the Bank of England’s 330 billion-pound Covid Corporate Financing Facility. While Virgin Atlantic’s credit score isn’t public, it’s believed to be deemed junk by the three major ratings companies.
The funds were later tapped by British Airways, EasyJet Plc and Jet2, and even Ireland’s Ryanair Holdings Plc and Wizz Air Holdings Plc of Hungary. Government officials told Virgin it might still qualify for assistance, but opposition was mounting in the U.K., with some politicians and newspapers arguing that Branson’s residency in the British Virgin Islands– where there are no income or capital-gains taxes — should preclude government aid.
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