Branson backs Virgin Australia with fresh 5% stake

The Brit billionaire has put his money where his brand is.

By David Flynn, November 19 2020
Branson backs Virgin Australia with fresh 5% stake

Richard Branson is backing the rebooted Virgin Australia with optimism and a splash of cash, taking up a fresh stake in the airline after his previous 10% holding was wiped out.

"I'm delighted that Virgin Australia is ready for take-off once more, soaring out of administration, with a clear future direction to fly towards," Branson said in a statement issued to media overnight.

"We're very optimistic about the future and enormously proud of all of the Virgin Australia team."

Branson's Virgin Group confirmed it had secured 5% in the airline, which was removed from the ASX earlier this week following the transfer of all shares to Bain Capital.

According to The Australian Financial Review, Branson was "in talks to take more than 5%, however Bain was keen to retain as much of the equity as possible given its big financial commitment to recapitalise and restructure Australia's second biggest carrier."

Virgin Group is now the airline's second-largest shareholder after Bain Capital, with the Queensland Government in third place as part of a $200 million package offered through its QIC investment arm.

It's not known how the new Virgin Group agreement addresses the contentious issue of licensing fees paid to Branson for the use of his Virgin brand, which were previously pegged at around $15 million per year.

After Virgin Australia collapsed into administration on April 21, Branson said he was determined to see the airline survive and thrive.

"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."

Also read: Bain reveals plans for new 'mid-market' Virgin Australia 2.0

David

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.

24 Aug 2011

Total posts 808

It maybe that the shareholding is achieved over a period of time by Virgin Group waiving the licence fees it would have otherwise received.

VA

17 Jun 2014

Total posts 16

I’m guessing the QIC stake is what will enable them to use Australian traffic rights? Might be a while before that’s more than an academic argument. 

Qantas - Qantas Frequent Flyer

11 Oct 2014

Total posts 551

Perhaps, tricky Dickie is getting in early with a 'holding purchase reservation' for when Bain & Co. does their 'makeup' job and prepares to sell in a few years? Why he seems to have such an obsession for a money-losing enterprise is a distinct worry, in my view.

Interesting that he can afford a 5% stake in a $3.5b VA enterprise, but was crying poor when it came to the Virgin Atlantic UK rescue.


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