Virgin godfather Sir Richard Branson is digging deep to unlock a billion-dollar rescue package for an aviation and travel empire suddenly becalmed by the coronavirus pandemic.
The Brit entrepreneur already has pledged a Caribbean island and at least $380 million to shore up a leisure and travel empire roiled by the coronavirus pandemic. Now he’s selling a chunk of his stake in Virgin Galactic, his most valuable listed asset, to raise as much as $750 million.
The billion-dollar bounty would be distributed among ventures such as Virgin Atlantic, Virgin Australia and the newly-minted Virgin Voyages cruise line, which appears to have been launched at the worst possible time.
“Because many of our businesses are in industries like travel, leisure and wellness, they are in a massive battle to survive and save jobs,” Branson said in a March blog post.
Branson will still have a stake worth more than US$1 billion in the space-travel company even if he sells the maximum proposed amount. His net worth has dropped 12% this year to US$5.1 billion, according to the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people.
Branson to woo Virgin Australia's winning bid?
"We remain confident that our target of achieving a sale by the end of June is achievable" lead administrator Vaughan Strawbridge has said.
Although Branson's 10% stake in Virgin Australia will be wiped out during the administration process, he's expected to wait until the airline's buyer is confirmed and then offer his support to that consortium. Regardless of the state of the airline's financials, Branson's Virgin Group pockets an estimated $15 million per year in brand licensing fees.
Virgin Atlantic this week began courting potential investors to avoid a similar fate – yet just last year, the airline's future seemed so promising that Branson scrapped the sale of a 30% stake to Air France-KLM in favor of retaining control.
As part of its immediate survival plan, airline will abandon London's Gatwick Airport, close to the Virgin's headquarters at Crawley, and shift all flights to London Heathrow, while also eliminating 3,150 jobs – about a third of the workforce – to ride out the coronavirus crisis.
Its fleet of Boeing 747s will be scrapped, and the delivery of six new Airbus A350 jets sporting the latest-design Upper Class business class seat has been deferred.
Additional reporting by Bloomberg