Billionaire Richard Branson is pleading for government support for his airlines, and has offered up his private island in the Caribbean as collateral on loans.
In an open letter to Virgin Group employees on Monday, Branson said his two airlines, Virgin Atlantic and Virgin Australia VAH, +6.17% , need help to keep operating in the wake of coronavirus-related shutdowns worldwide.
“Over the five decades I have been in business, this is the most challenging time we have ever faced.”
“We will do everything we can to keep the airline 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,” Branson said, referring to a commercial loan, and noting that his airlines are not alone in needing aid.
“The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it. Without it there won’t be any competition left and hundreds of thousands more jobs will be lost, along with critical connectivity and huge economic value.” Branson said without his airlines, British Airways, which is owned by International Consolidated Airlines Group IAG, +1.41% , and Australia’s Qantas QAN, would have virtual monopolies in their home countries, hurting consumers.
Branson, who has an estimated net worth of $5.86 billion, according to Bloomberg News, said he doesn’t have the necessary cash on hand to bail out his airlines himself, saying his wealth “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 Virgin has already committed $250 million to shore up its businesses amid the pandemic, and he has been allocating cash from the Virgin Group and his personal wealth to try to preserve as many jobs as possible.
“The challenge right now is that there is no money coming in and lots going out,” he wrote.
Last month, Virgin Australia reportedly asked the Australian government for a $1.4 billion loan. And the Financial Times reported last week that Virgin Atlantic has been told to resubmit its £500-million loan application, which reportedly failed to impress the British government.
Branson said he will offer his most prized possession, Necker Island in the British Virgin Islands, as loan collateral. “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 group.”
In addition to being his family home, 74-acre Necker Island, which was heavily damaged by Hurricane Irma in 2017, is a luxury resort that employs 175 people.
Virgin Group, which in addition to the airlines includes Virgin Galactic SPCE, -11.21% , Virgin Mobile, Virgin Records and Virgin Care, among many other units, employs more than 70,000 people in 35 countries.
Originally Published on MarketWatch
