Richard Branson addresses criticism in an open letter to Virgin Group employees

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Sir Richard Branson published an open letter to Virgin Group employees yesterday, in part to address some of the criticism he has received – including in our comments – over issues including his liquid (as opposed to asset) wealth and his tax status.

It includes a commitment to raise funds against Necker Island, if possible, to inject into Virgin Group companies.

The timing was unfortunate, as it includes a paragraph on Virgin Australia which slid into administration shortly after publication.

As we covered on Saturday, the UK Government is believed to have rejected Virgin Atlantic’s first bid for a rescue loan on the grounds that it had not sufficiently exhausted the resources of its shareholders (Virgin Group and Delta Air Lines) and that its business plan to repay the money was too optimistic.

I have included extracts below.  The full letter can be found here.

For clarity, the bolding and images were added by me.  Outgoing links have been removed but can be found in the original.

Over the five decades I have been in business, this is the most challenging time we have ever faced. It is hard to find the words to convey what a devastating impact this pandemic continues to have on so many communities, businesses and people around the world. From a business perspective, the damage to many is unprecedented and the length of the disruption remains worryingly unknown.

Together with our Virgin company teams, I am working day and night to look after our people and protect as many jobs as possible. We are operating in many of the hardest hit sectors, including aviation, leisure, hotels and cruises, and we have more than 70,000 people in 35 countries working in Virgin companies. We’re doing all we can to keep those businesses afloat and I am so thankful to all of you who have continued to work so hard in these difficult times. We have already committed a quarter of a billion dollars to help our businesses and protect jobs, and will continue to invest all we can. 

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. 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. The challenge right now is that there is no money coming in and lots going out.

My passion has always been creating businesses that improve people’s lives and over the years we have created hundreds of thousands of jobs. Today, the cash we have in the Virgin Group and my personal wealth is being invested across many companies around the world to protect as many jobs as possible, with a big part of that going to Virgin Atlantic.

Much has been said about Virgin Atlantic employees taking a wage reduction for eight weeks, spread across six and a half months. This was a virtually unanimous decision made by Virgin Atlantic employees and their unions who collectively chose to do this to save as many jobs as possible – it was not forced upon them by management.

I am so proud of the Virgin Atlantic teams who continue to deliver critical medical cargo flights to the UK, and the many Virgin Atlantic people who are currently volunteering with the NHS. Their spirit is so heart-warming and inspiring, and I couldn’t be prouder of our amazing people (it deserves saying twice!) I am also deeply moved by the thousands of messages of support from our incredible people at Virgin Atlantic and around the Virgin family. They mean so much to me – thank you all.

Together with the team at Virgin Atlantic, 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. This would be in the form of a commercial loan – it wouldn’t be free money and the airline would pay it back (as easyJet will do for the £600m loan the government recently gave them).

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. Virgin Atlantic started with one plane 36 years ago. Over those years it has created real competition for British Airways, which must remain fierce for the benefit of our wonderful customers and the public at large.

The same is true in Australia, where the brilliant Virgin Australia team is fighting to survive and need support to get through this catastrophic global crisis. We are hopeful that Virgin Australia can emerge stronger than ever, as a more sustainable, financially viable airline. If Virgin Australia disappears, Qantas would effectively have a monopoly of the Australian skies. We all know what that would lead to.

At this time of crisis, we also have thousands of brave frontline employees working for Virgin Care as part of the NHS under extremely challenging circumstances. First and foremost, I want to thank you all for your dedication and resilience. It is humbling to see all the incredible work you are doing providing much needed NHS services, in particular those of you who are helping and giving dignity to people with severe COVID-19 cases. We have invested more than £75m to date into the NHS and have never made a profit. If Virgin Care ever does make a profit, we have committed to reinvest 100 per cent of that back into the NHS.

Much has been written about Virgin Care’s dispute with a commission over a contract a number of years ago. Some will say it was unwise for Virgin Care to do this, but the most important thing is that Virgin Care was never intending to profit from it and 100 per cent of the money awarded went straight back into the NHS.

Virgin Money Giving, our non-profit fundraising platform, has also received criticism for the fees they took when processing a donation to charity. Virgin Money Giving never makes a profit and never will. Virgin Money Giving was founded in 2009 when Virgin Money began sponsoring the London Marathon. At the time, one player dominated the online fundraising industry. In a sector where the entire purpose is to make the most of the money raised for good causes, it operated with a for-profit business model.

Virgin Money wanted to disrupt this market by providing a not-for-profit alternative that challenged the status quo. Virgin Money Giving was able to offer the same service with just a two per cent fee (to cover overhead costs, which Virgin Money are now generously stepping in to cover completely for all charities). Virgin Money Giving has supported more than 1.3 million fundraisers, raising over £800 million for good causes – all without making any profit whatsoever. Tens of millions more have gone directly to good causes due to people donating through Virgin Money Giving rather than for-profit platforms.

There have been comments about my home. 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 on the edges of the BVI. Over time, we built our family home here. The rest of the island is run as a business, which employs 175 people. 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.

I have been honoured to work with all of you over the last five decades building companies and creating competition and choice for consumers across a whole range of industries. Our companies have created hundreds of thousands of jobs and paid hundreds of millions in tax around the world (and will continue to do so). Our companies based in the UK pay tax in the UK, and so forth.

You can read the full version here.

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Comments

  1. I for one don’t have an issue with SRB. I actually admire his entrepreneurship, I still don’t think they should get the loan though BUT for the sake of Virgins employees if they do get the loan then that’s completely understandable because it must be devastating being put in such a position but to put sympathies aside…

    VS is not needed. They don’t really offer enough competition in the market If you really think about it. They are of course an option on routes but competition? Not really. BA dominates British long haul travel and that’s just fact and it goes to show by its growing profitability and virgins fluctuations (although there were signs they were coming out) but I can’t imagine there’s a scenario in this economic outlook that virgin is able to pay that money back along with the debit it already has and the government knows that which is one of the main reasons they sent them back – their business outlook was of course too optimistic. The airline has struggled to make a profit but even that aside let’s free the past and look to the future. It’s a long haul carrier only and looks to leisure travellers and point to point travel. So no short haul/no feeders…now what is the outlook for that business in the short run? I would like to imagine quite bad especially to the USA given that is by far their largest market. So my question is is 500M going to save them or just going to buy them time upon which they will fail…anyway and then money wasted.

    • Interesting. I, from a purely customer basis, do see BA and VA as competitors for transatlantic flights, and given the choice for similar flights and prices, I would always opt for VA over BA, and would feel it was a good deal to grab a VA ticket at the same price as BA are selling them. It’s just my personal preference based on experience and service, perhaps.

      Sure, it would be nice if there were more connection options, but that could always happen in the future by working with another airline, even if VA were to remain focused on long haul.

      The business viability side – I’ll leave that for others to judge. Aside from to respond to the last sentence to say – nothing on this earth will last forever, so maybe that means it is all “money wasted”?

      Anyhow, I also admire SRB and his entrepreneurship, etc. I just wish my satisfaction with Virgin Trains and Virgin Media was up to the same level as my Virgin Atlantic experiences have been.

      • I will say they do offer slight competition across the Atlantic though I feel that is really bright on more by united and delta moreso than virgin. BA serves about 100 long haul destinations VS serves about 40. I mean so there are about 60 long haul destinations that VS just does not compete AT ALL. I chose to leave out short haul seeing as they gave zero presence there as well. At least on this side of the pond.

        And of course to my last point. I meant if they fail as a result of coronavirus impact then that will be money wasted as the whole point was to save them from it

        • And usually, where VS and BA compete, there´s another competitor on the route. On many USA routes you have Delta/United, and on the Asian side, you have CX, all the Chinese airlies, ANA, Singapore, Thai, Malaysia Airlines, Singapore,… Caribbean, you have Tuifly. India, Air India. The ones where consumers would lose a competitor are Lagos, JNB and CPT (but I think CPT hasn´t even started).

          • Not sure that many people see Air India via Delhi as a realistic alternative to Barbados to a direct flight on BA or VS!

          • Never said you can fly to Barbados with Air India. I was referring to destinations served by VS and BA where there are other competitors. (DEL + BOM, Air India). Caribbean, plenty of Tuifly – doesn´t mean you can get it with points though.

          • Spaghetti Town says:

            Except there’s only a choice of 3 airlines + Norwegian going to the US. That’s where the competition problem lies.

          • @Spaguetti Town… there´s only 3 airlines to the US. How many airlines do you need? Where do you draw the line? 1, 2, 3, 4? To Dubai, there´s only BA and EK. There used to be 5 players: BA, EK, VS, Royal Brunei and Qantas. Has product quiality gone down and prices up? (these are the consequences of less competition).

  2. mr_jetlag says:

    I have no issue with Branson other than having noted his intervention was ill judged and that any bailout money could be better spent elsewhere. Others seem to feel an urgent need to take up cudgels to defend him, perhaps they one day hope to be in the same position? Here I thought the US was the land of “temporarily embarrassed millionaires”…

    • No lockdown for moi says:

      I feel no urgent need to defend him other than to note he has done nothing wrong legally or morally, as a serial successful entrepreneur who set up many excellent businesses, he has over the years employed countless thousands of people who together with Virgin have paid countless £ billions in taxes, NICs etc (funding the NHS, police, schools).

      Too much hate around for a successful rich guy who has sensibly retreated to a coronavirus-free island rather than UK (plague island).

      • mr_jetlag says:

        Indeed, he has done nothing wrong legally (do let’s avoid the morality rabbit hole 🙂 and a very successful man to boot. If I were in his shoes I would keep my head down and let Rolls Royce et al make the case for bailing out VS. Why he felt compelled to issue this letter, I’m sure I don’t know.

        • I’m loving the hypocrisy of the morality brigade in this comments section – lots of morals and outrage when it comes to Branson allegedly dodging tax and not being a very nice man but absolutely no morals whatsoever when they demand that VS goes to the wall and thousands of people are made unemployed.

          (Alleged) tax dodgers who then beg for taxpayer cash may be reprehensible but the morality police who only cite morality when it suits them are truly despicable.

          • mr_jetlag says:

            (◔_◔)
            if you read my other post, I’m advocating the same debt for equity and shareholder dilution that you are in your blog, so spare me the false outrage zigs.
            The only difference in opinion here is that you believe Virgin going bust must be avoided at all costs. I disagree, but somehow that makes me a hypocrite because…?

        • I don’t appear to be able to reply to your comment under mine so I’m replying here.

          I wasn’t calling you a hypocrite at all. Your point was that we shouldn’t go down the morality rabbit hole and I simply pointed out some of the hypocrisy I’m seeing on here.

          • mr_jetlag says:

            ah then I apologize, I thought that particular broadside was aimed at me, I do present a wide target.

          • No apology necessary – In hindsight, I can see how my comment could easily be misunderstood.

            As for “wide targets” – I fear I’m becoming a wider target by the day the longer this “lockdown” (of sorts) carries on! 🙂

  3. Fabulous Dahling says:

    To quote a previous poster…..but just dislike of aggressive serial tax avoiders who are grasping at the taxpayer in almost unseemly haste.

    Step forward……… Victoria Beckham multimillionairess utilising the governments 80% scheme, for a vanity project/business that never made a profit.

    • +1, I eagerly await the daily Piers Morgan savaging these days!

      • And that footballer who won’t take a 12.5% pay cut.

        • Fabulous Dahling says:

          Arsenal’s Mesut Ozil, poor thing can’t manage on £350,000 a week.

          • But he’s not asking for a loan supported by my taxes.

          • Kim Il Sung says:

            Maybe he could donate a few quid to Branson. There’s only so many Range Rovers you can reasonably buy after all….

        • Why bash a footballer when Matt slimy Hancock wasn’t willing to take a paycut and follow his own advice on footballers “doing their bit”

          I have seen Ozil do very good charitable work and read news articles written about it secondly if there was three players who refused the 12.5% pay cut why wasn’t the other two names mentioned – he was willing to defer his wages thus saving the club £350k a week that’s 100% the football club would save – where would the 12.5%/100
          % of his wages go? his union the PFA advised all footballers to not take any pay cut whatsoever. half of 12.5% would go to the govt to waste on vanity projects anyway.

      • What’s Piers Morgan ever done for Britain? He illegally hacked phones and published fake photos depicting false allegations of British troops abusing Iraqi civilians. But, Branson who’s employed thousands of people and built successful British businesses is a villain according to Anna. Interesting.

  4. No lockdown for moi says:

    I think one bon mot we should all bear in mind is: Rules are for the obedience of fools and the guidance of wise men.

    • mr_jetlag says:

      Attributed to one Cpt Douglas Bader, who lost both legs disobeying the Rules. 🙂

  5. Terry Curren says:

    Virgin staff are being supported by UK tax payers. Someone will buy the planes and fly them; Branson transfered money to a safe haven. Let nature take its course and Branson lose HIS money; he will learn how his staff feel when faced with such limited financial resources.

    • No chance, if Virgin go that’s it. But yes the taxpayer will be supporting a lot of Virgin staff for a very long time if they go.

      • Novice says:

        May I ask why does this matter so much to you, J? As I have only ever noticed your comments regarding Virgin…

        I’m just asking for science…

        • Novice says:

          Btw I mean nothing bad by my comment. I personally have nothing against Virgin or Branson. Us young people see the guy as an inspiration due to his successes.

        • I comment on lots of things I use regularly and have experience of such as Virgin, BA, Lufthansa, Ryanair etc. I don’t work for Virgin, nor any close family/friends. I have had many good experiences with Virgin though and many bad experiences with BA.

          • Novice says:

            Fair enough.

            I can understand that then.

            Once in my lifetime (recently) I had the misfortune of using Jet2 and if I were to be asked about them I reckon I’d be passionate about giving my two cents about them. So I understand frustration.

          • Really? I’d heard good things about Jet2 for a LCC – can be lucky/unlucky with any though. Whoever it is with let’s hope we can fly again safely sometime soon 🙂

      • Lady London says:

        And as Rob sort of said, we’d be paying through the nose for British Airways flights for up to 10 years after VS disappears if we are lucky.

  6. Mikeact says:

    I would imagine that Virgin have numerous lobbyists knocking on Whitehall doors, and undoubtedly a very powerful group. Will they get their way ?

  7. To which country do Virgin’s plane leasing payments go?
    I just wonder, overall, where any £500m loan to Virgin Atlantic would get spent. Should it mostly go overseas then one can understand HM Treasury’s reticence. Conversely if the cash-flow is mostly spent in the UK, including reimbursing Joe Public, then it flows into the UK economy anyway.
    Not seen this point discussed.

  8. “Joan and I did not leave Britain for tax reasons”

    Yeah, right that didn’t influence the decision at all.

    Easy to prove it.

    I believe HMRC welcomes donations.

    • You are missing the totally obvious point. The companies could remain registered in the BVI and he could live anywhere. All of Apple’s non-US businesses funnel into Jersey now. If you were in your 70s would you really live somewhere you didn’t want to live, purely to save a few quid on tax?

      • Why not just register them in the UK then?

        • Obviously he could. But that wasn’t the question. The question was about why live abroad. And the answer is ‘because he prefers it’, not ‘because of tax’, because he’d get virtually all the tax benefits just by moving the legal entities.

  9. Virgin miles data point. With the uncertainty I derisked a little over half my balance.

    Sat 28th March
    Transfer to Hilton initiated by txt,

    Early April
    Received email for security checks (keep an eye on your junk folder)

    21st April
    Hilton points arrived.

  10. https://www.forbes.com/sites/willhor…/#2cb0f0a630d2

    Forbes reports “Delta will not be providing Virgin Atlantic any financial assistance. It is Delta expecting cash: Virgin has to pay Delta $200 million related to their joint-venture, the airlines agreed earlier this year.”

    The $200m Virgin Atlantic owes Delta stems from them combining their joint-venture into the larger Delta-Air France-KLM JV, which resulted in a change of performance.

    Ed Bastian Delta CEO apparently also said ““We’re not in a position to be making any financial commitments to any of them,” “They are aware of that.” Delta’s other major investments include Aeromexico and LATAM.

    ” I trust Virgin Atlantic will work through its challenges with the Government and with Richard. If they are required to go through an administration process in the UK, I’m confident they could re-emerge, there is a need for the Virgin brand”

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