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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 (215)

  • Nick says:

    What are you expert thoughts on his reponses to the criticisms thrown at him? Is he innocent of any ‘wrong doing’ etc?

    • Anna says:

      Legally, no, however he seems to suffer from the same failure to grasp the realities of life for people who don’t have much money which seems to afflict many wealthy individuals (even when they come from humble origins) and the same propensity to assume that the public is stupid. “Didn’t leave the UK for tax reasons” – is he having a laugh? And if he genuinely didn’t, I’m sure he could have paid the tax if he’d really wanted to. But this is the man who demanded that the UK taxpayer fund the clean up operation in the BVI tax avoiders’ paradise following Hurricane Irma so I’m not altogether surprised.

      • J says:

        And because some rich foreigners live on the British Virgin Islands, the local population do not matter? Britain keeps these overseas territories so has a responsibility in times of war, natural disaster etc.

      • Catalan says:

        Anna whilst I agree with you comments above there’s is one exception, the comment regarding the BVI. These island are also inhabited by ordinary working class people who could only dream of being wealthy. The island are British Overseas Territories and it’s citizens are as British as those in the Falklands and indeed, Gibraltar. Why wouldn’t UK taxpayers pay to help after the devastation of Hurricane Irma?
        It is this very lack of knowledge of British history that lead to what became the Windrush scandal.

        • Paul Pogba says:

          Falklands Island citizens are full British citizens, citizens of British overseas territories are British nationals. British nationals don’t have the right to abode in the United Kingdom but do get consular protection when abroad.

          Isn’t there a moral argument that people that pay a higher level of taxation in the UK shouldn’t be responsible for problems arising in low tax jurisdictions? Why should someone stuffing envelopes in an Amazon warehouse in Swindon pay taxes to rebuild the amenities of a millionaire living in overseas tax haven?

          • Ken says:

            I thought British Overseas Territories citizens born there (and maybe through parents) got British citizenship from 2003, and basically similar to Falkland Islands.

            But then who is going to move from Turks and Caicos to Slough

          • Paul Pogba says:

            I think many became ” British Overseas Territories citizens” in 2002 but it didn’t change their right to abode in the UK.

          • J says:

            As Catalan said there are lots of very ordinary working class people living in these islands. Why should they be punished because you don’t like Richard Branson? The local BVI population are not fabulously rich millionaires – really, do some basic research.

          • Catalan says:

            @ Paul Pogba. As of 2002, inhabitants of these islands and all other British Overseas Territories have FULL British citizenship and therefore the right of abode in the UK.

          • Spaghetti Town says:

            why do the falklands get british citizenship and the other territories don’t didn’t?

            Wonder if I could move to the falklands. Don’t think my employer has an office there though so no chance of a secondment!

          • John says:

            @Spaghetti Town

            Because Falklanders are white.

            As mentioned above, the situation was rectified in 2002, except for the former British Dependent Territories Citizens belonging to Hong Kong.

          • Paul Pogba says:

            Thats two things I got wrong, my citizenship info was 18 years out of date and I’d lost track of Tigerair being owned by Virgin Australia. Humble pie for tea.

      • TGLoyalty says:

        The BVI is British territory so the UK taxpayer has a duty and in areas where there are low income taxes there are usually still high consumption taxes.

        I find it interesting people want to discuss his tax exile status but don’t back that up with how much tax he should have paid.

        I know he takes no wages from his speaking business and he hasn’t drawn any dividends from VHG. So what personal UK derived income should he be paying tax for?

        • Paul Pogba says:

          The only duty the Britain has to her territories is defence.

          We couldn’t calculate what Branson should have paid had he been tax resident in the UK without him putting more information into the public domain. However, it’s probably fair to say he would have paid more if he was tax resident in a country with income taxes between 20 and 45% than one with 0%.

          • Anna says:

            I am inclined to agree – while humanitarian issues should always be given consideration these governments are allowed to choose not to tax their citizens; they make no contribution to the UK. Meanwhile those governments collect billions of $ in levies on companies which use the islands as tax shelters and often have considerable financial surpluses because of this; it should be down to them to make adequate provision for their own people in times of need. Our own governments have been complicit in this despite censure from the EU. A fascinating insight into this largely unknown world is Treasure Islands by Nicholas Shaxson – I started it a while back but have recently had the time to pick it up again!

          • Spaghetti Town says:

            We should include the republic of Ireland as UK territory then 😀

            For some bizarre reason, we have to provide their defense even though they hate us

          • J says:

            Over the years British governments have effectively encouraged these places to become tax havens so they’re not reliant on Britain funding them. Any criticism of them has usually been gesture politics at its finest.

        • Paul Pogba says:

          On humanitarian issues I don’t think our obligations go any further than any other distressed nation and I think we should do our bit to help anyone out where we can as part of an international effort.

          The territories have an intermediate relationship with the UK between independence and being fully integrated into the country (and paying UK taxes, full citizenship, having representation in the Commons). I don’t see why that shouldn’t be up for debate or negotiation in either direction but as it stands they contribute nothing to HM Treasury and that should limit our obligations to them to whats agreed (which is defence and diplomatic relations).

          • Catalan says:

            Well in that case give the Falkland Isle to Argentina, Gibraltar to Spain and be done with it!

    • bazza says:

      Leave it out, his got a list as “long as ya arm”

  • Steve says:

    I find it very difficult to feel sorry for SRB. Yes he has been a success business man who had amassed a great wealth starting from very little. Well played. He is also a person who seems to pay no personal tax. Again well played if that’s your goal. As for asking for handouts I see nothing wrong in that as long as the Government end up with an equity stake in a viable business. I find it confusing when all failing big businesses around the world are waking around with their hands out. Without equity stakes I do not believe companies should be bailed out.

    • Thywillbedone says:

      “Starting from very little” is certainly how he spins the story…

      • tony says:

        I think he went to Stow school, which isn’t far from where I live. Current fees start at £25k a year, give or take. I guess “little” is all relative.

        Funny how this is circular, too. In his early days of business, the story goes he screwed up royally in selling export record stock in the UK market. HMRC caught up with him. £70k fine on top of the 33% tax due – back in 1970 – but it was cool as his parents remortgaged their house to get him off the hook.

        • The Headmaster says:

          Stowe with an e. Fees actually are being cut to £18.5K a year. This will bring Stowe into line with other top schools in neighbouring counties such as Bedford ,St Albans, Habs, MTS as well as to encourage the middle class parents of UK citizens to send their offspring.

          • Richard says:

            You are not, by any sensible definition of ‘middle’ class, middle class, if you can afford 7 lots of Stowe fees to send your kid there for secondary and sixth form.

          • Rob says:

            Middle class is a very flexible definition though. I would call myself middle class, but as my Dad was a steelworker and my kids go to private school in Knightsbridge it is debatable either way.

          • Lady London says:

            Upper middle, Rob.
            I think that’s the Chelsea description.

      • Spursdebs says:

        Yes he makes out he was a pauper who started from a poor background. Not sure attending Stowe School was a huge disadvantage or indeed having wealthy middle class parents. But I’ve actively avoided anything with his name on for years he’s always come across as disingenuous to me.

  • Nick says:

    Oh well, if nothing else, one positive is that his PR department must still have jobs and be working hard.

    • Born2sKydive says:

      Yep, love Virgin Atlantic but this just comes across as written by PR team, with legal signing off final draft with Bransons “signature*.

    • Mr B says:

      When you say PR department, you mean Rob and HFP? I was looking forward to reading how Rob would spin the situation today. A little bit of bold in all the right places….. he’s played a blinder!

  • Erico1875 says:

    It’s quite an emotional plea which should rally support from the man on the street.
    I wonder how much Necked is worth as collateral For competition purposes, it is probably best to save Virgin, however the UK taxpayer should at least take a % stake pro rata

  • Sapiens says:

    If billionaire owners want the public to bail out their companies, they need to give up BIG equity for it.

    It’s a mickey take… company profits are private and billions of tax avoided, but if there is a risk of loss, then the government (who you avoided paying tax to) must step in with a tax funded loan 😂.

  • Ken says:

    Take away the highly aggressive tax avoidance and the fact that he has many stakes in businesses that he could raise funds against, rather than the emotional blackmail of mortgaging his home, how will Virgin Atlantic pay the money back ?

    Couldn’t make money in the decent times, is the aviation market going to return to 2019 levels by 2025 ? It seems unlikely.

    Will it hugely damage the UK losing flights to holiday destinations like the Caribbean and Florida ?

    • J says:

      What schemes? Virgin Atlantic specifically is a UK company and was profitable until 2017 and pre Corona were probably on track to return to profit next year.

      • Ken says:

        Profitable until 2017 is stretching it.

        Lost 76m in 2013, Lost £105m in 2012.

        It’s fairer to say that over a decade (even ignoring 2010 – lost £130m), it loses money.

        If it’s so profitable, where’s the money gone ?

        • TGLoyalty says:

          Are we talking about operating profit or bottom line after all deductibles?

          • AJA says:

            Most people talk about profit as in taxable profit i.e. the bit that generates tax revenue for the treasury.

          • Ken says:

            Most of the loses are at both operating profit level so before finance costs.

            Although accounts in public domain, who knows the breakdown of “other overhead costs”

        • Lady London says:

          Tbh on their turnover, with that small loss it looks like the reporting could have gone either way. Making a small loss officially… guessing if it’s that close it would have come down to how things were reported.

          Which does indicate the underlying business was sound?

    • Matty says:

      “Will it hugely damage the UK losing flights to holiday destinations like the Caribbean and Florida ?”

      Not really. Can’t be much further than Lloret de Mar.

  • J says:

    BA was born out of a state owned monopoly, so compared to that Virgin have always been the underdog and Branson did come from nothing to take on a mighty old monopoly – that he went to a private school really does not take away from this achievement.

    BA repeatedly broke the law to try and put Branson and before him, Laker, out of business. Branson’s critics remember his own mistake with the law but conveniently ignore all of that and the dirty tricks and Laker cases BA lost.

    Branson’s mistake though perhaps has been to make himself so integral to the Virgin brand. Old Tory types hate him because he does not wear a tie and has supported liberal causes for decades supporting gay rights when the Tories were still screaming about section 28 (it made good business sense too, he owned Heaven night club in the 80’s). And he’s obviously not liked on the left because he’s a billionaire. So because all these people don’t like Branson individually they’re happy to see Virgin go under.

    If they get their wish look forward to higher prices on BA, a worse product, devalued Avios and losing the 2 for 1 voucher because I can’t see any reason for BA to not further deteriorate without having at least some competition from another British airline.

    Air Berlin were not perfect but at least provided some competition for Lufthansa. Germany is the biggest market in Europe and yet no competitor of their size has emerged. Lufthansa don’t even fly many routes they used to. If Virgin go, I don’t think it’ll be very different.

    • Ken says:

      How quickly we forget that there were two parties to the fuel surcharge price fixing of 2004-6 and it lasted roughly 2 years.

    • Chrish says:

      Hi, J, Yes i agree with you entirely you make a VERY GOOD case for letting both Virgin and BA go to the wall BOTH very undesirable company’s maybe from this crisis could evolve two NEW decent Airlines

    • AM says:

      Well said

    • Andrew says:

      I don’t get this argument that Virgin are the only competition to BA and that without them BA would have free reign to up their prices. When I want to fly to America I have a choice of the British and American airlines. If I want to fly to Asia I have a choice of British and Asian airlines. Virgin disappearing won’t change that. BA wouldn’t be able to name their price for transatlantic flights because they’d become hugely uncompetitive with the American airlines. By my count 6 airlines currently fly direct from London to New York.

      • Spaghetti Town says:

        Except there’s limited competition across the Atlantic already through a Triopoly.

        Going East it doesn’t really matter if Virgin go under as BA’s route network is relatively smaller as soon as you get past the middle east

      • RK says:

        BA & AA have a revenue share, so that would be less competition in the market. VS is not part of any revenue share with BA.

    • Paul Pogba says:

      If VS disappears completely and the aircraft end up in another country servicing different routes there would still be at least two airlines for every route – AF would still compete between the UK and France, likewise DL and UA on transatlantic routes. Its also likely that FR and U2/EC/DS continue flying. The UK has to worry about a duopoly at worst and thats if someone doesn’t start a new Virgin-like airline when demand picks up.

      Australia is slightly different, domestically they would have Tigerair and QF but internationally everything looks a bit complicated. There are oneworld airlines going west (QR, BA), north (CF, MH) and east (AA) with QF having a tie up with Emirates. That doesn’t look very competitive to me.

    • Lady London says:

      Thank you @J for pointing out the actions of Lufthansa. I hadn’t connected the fact of Air Berlin’s demise with Lufthansa dropping all their useful routes to regional airports – which they did suddenly leaving me in the lurch on an award ticket I had. Suddenly the routes on my ticket weren’t there any more

      That has opened an era of poor service and excessively high prices on the few flights by people like Eurowings while Lufthansa sit comfortably with their still huge overheads in Frankfurt and Munich (only).

      No wonder German state and national governments apparently colluded so long to keep out Ryanair.

  • mr_jetlag says:

    tone deaf and probably counter productive move for Branson. I don’t believe people will be very charitably disposed to a man who is self isolating on his de facto private country.

    As a business I agree with the necessity of competition for BA, but not welfare for billionaires. Or worse, UK state aid for Delta.