Branson Pleads For State Loan To Save Virgin Atlantic Airlines, Offers Caribbean Island As Collateral

KEY POINTSBranson warned that without a loan from the UK government, Virgin Atlantic will collapseVirgin Atlantic is owned jointly by Branson and U.S. carrier Delta Air LinesBranson purchased Necker Island in the late 1970s for $180,000

Billionaire Sir Richard Branson has again pleaded with the British government to provide him with a £ 500 million ($622 million) commercial loan in order to save his Virgin Atlantic airlines from collapse.

“Many airlines around the world need government support and many have already received it,” Branson wrote to his staff in a public blog post. Without aid from the U.K. government, he warned that “there won’t be any competition left and hundreds of thousands more jobs will be lost.”

Virgin Atlantic, which is owned jointly by Branson and U.S. carrier Delta Air Lines (DAL), was reportedly turned down for aid by the U.K. Treasury last week. The British government has recommended that struggling airlines seek all other options – including reaching out to stockholders – before requesting government aid.

Branson further wrote in his letter: “We will do everything we can to keep the airline [Virgin Atlantic] going — but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for. This would be in the form of a commercial loan — it wouldn’t be free money and the airline would pay it back.”

Branson cited that another British airliner, EasyJet recently received a £600 million ($746 million) loan from the government.”

Last month, Branson himself offered £250 million ($311 million) into the Virgin Group, with the bulk of that figure earmarked for the airline subsidiary.

Virgin Australia – which Branson owns a 10% stake in — is reportedly on the brink of bankruptcy after the Australian government refused to provide it with a loan.

Branson, who reportedly has a net worth in excess of $5 billion, also addressed sharp criticism he has received for asking the British taxpayer for funds while he has lived in the tax-free haven of the British Virgin Islands for the past 14 years – that is, paying no taxes in the U.K.

Branson insists his true financial worth has not been accurately depicted.

“I’ve seen lots of comments about my net worth — but that 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,” he said. “Over the years significant profits have never been taken out of the Virgin Group, instead they have been reinvested in building businesses that create value and opportunities.”

Regarding his long-term residence in the Caribbean, Branson commented: “[My wife] Joan and I did not leave Britain for tax reasons but for our love of the beautiful British Virgin Islands and in particular Necker Island, which I bought when I was 29 years old, as an uninhabited island… Over time, we built our family home here. The rest of the island is run as a business, which employs 175 people.”

Now, Branson said he may put up Necker Island for sale in order to serve as collateral for any funding from the U.K. government.

“As with other Virgin assets, our team will raise as much money against the island as possible to save as many jobs as possible around the [Virgin] Group,” he wrote.

Branson purchased Necker Island in the late 1970s for $180,000 – its former owner Lord Cobham initially asked for $5 million. Branson subsequently built a resort property on the island – by 2006, Necker had a value of about $60 million.

Branson’s public blog post received mixed reactions. One man wrote: “Richard, you have always been an exceptional employer and always shown 100% respect for your staff.”

However, an irate respondent blasted Branson, by claiming: “You’re a parasite upon society — avoiding tax, suing the [National Health Service] to make more money for yourself and making your workers pay the cost while protecting yourself.”

Branson has also been criticized by some British lawmakers.

The former shadow chancellor John McDonnell –a Labour Party MP for Hayes and Harlington — told the Guardian that “rich billionaires [were] milking the system” during a period of national crisis.

Angela Rayner, deputy leader of the Labour party and an MP for Ashton-under-Lyne, tweeted: “Richard flog [sell] your private island and pay your staff, we are in unprecedented times here. Now is the time your staff need support after making mountains of cash for the company.”

Richard Fuller, a Conservative MP for North East Bedfordshire, suggested to Branson: “pay your employees yourself their unpaid leave. When it comes to looking at the protection of your workers, the time is now, and we will judge you all by your actions.”