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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)

  • Bill says:

    Never had an issue with him until virgin care

  • The Lord says:

    When you have people like Rayner and Burgon tweeting that Beard is some capitalist devil I think I’ll side with the Beard. So many cheap shots at the bloke all in the name of likes and retweets. The debate over him, his and his companies actions is seriously absent of fact. Don’t see what he did wrong with Virgin Care (didn’t sue NHS for millions like is widely told by people), VS is a UK company that pays UK taxes and employs thousands of Brits. Obviously those points wont get my any likes or retweets, doesnt make them less true though.

    • J says:

      And then another section of people hate him because he’s been vocal against Brexit. The focus should more be on VS staff and the benefits to the UK of two British airlines flying a lot of these routes – but like you say it’s more about attacking him over something else.

      • marcw says:

        UK airports moved about 290 million pax durig 2019. Virgin Atlantic is responsible for,… max 6 million pax. VS network is negligible, compared to BA, Ryanair or easyJet.
        It would be sad is VS goes – not for the airline itself – but for the employees. It sucks. Bad it´s not the taxpayers responsibility to keep afloat companies and enterprises that were not profitable pre COVID-19 (and sorry, but 2018-2019 were the years where airlines worldwide wrote massive profits – VS, in contrast, had losses).

        • The Lord says:

          Not disagreeing but the fact that people have an axe to grind with Beard shouldn’t have a role in the ultimate decision that the govt make. If the govt does offer loans or some other form of support the headlines will read bailout for billionaire, people will be tweeting for retweets likes and views that we are able to bailout a billionaire who lives on a private island but can’t pay our nurses properly or provide them with adequate PPE when infact the two are not linked. In reality it will be a British employer that is saved, not an old bearded man.

          • marcw says:

            TBH I don´t care about Beard. I´ve never talked about him in my comments. I´m just talking about supporting with a grant (aka loan not paid back) a non-profitable business. Where do you draw the line? Staff? Profitability?

          • Rhys says:

            No evidence so far suggests that Virgin is seeking a grant. It is asking for a government-backed loan.

          • marcw says:

            Rhys, a loan that is not repaid back is technically a grant.

          • TGLoyalty says:

            Surely it will be paid back unless they go under in the future, which is unlikely in normal times.

          • Mikeact says:

            So how are they going to pay it back based on their current track record, and the big unknown of their major market- the US ?

    • Josh says:

      There is far too much war mongering going on by certain types of people who have forgotten have important VS is. The employees, the airline, the jobs in connected industries. Additionally, its role as a competitor and driver for innovation.

      There are some really nasty elements calling for thousands of people to love their jobs, all over their misguided prejudice

      • Josh says:

        *lose their jobs, rather…I only wish the nasty people were calling out to people to love their jobs!

      • Heathrow Flyer says:

        I think it’s important to remember the issue of the US airlines getting huge levels of free cash (not even loans) from the US govt. If you let VS go to the wall then the slots will potentially be acquired by Delta/United/American – who have been bankrolled by the US state. So you’d have similar levels of service across the Atlantic, but obviously all the well paid Virgin jobs (Engineering/Head office/pilots/marketing/legal etc) that were in the UK (and all its suppliers) disappear and the UK is worse off as a result.

        • mr_jetlag says:

          but your argument is that we should instead bankroll an unprofitable business (including those well paid jobs mentioned) using the public purse? How many nurses can I get for one Head of Customer Experience?

          • No lockdown for moi says:

            You could get a lot of nurses from the taxes that would have been paid by strategic UK industries that have been allowed to be sold off to foreign interests – no just corporation tax but all the other taxes – water, energy, spirits, airlines, airports, trains, infrastructure to name but a few.

            Other countries protect their strategic interests, especially within EU.

          • Heathrow Flyer says:

            To an extent – yes. And remember not everyone can be a nurse or doctor.

            And yes, whilst VS is unprofitable, it was only marginally so. And as other readers have commented – if you only save very profitable businesses you’re going to have a lot more Amazons and a lot fewer John Lewises going forward.

          • mr_jetlag says:

            @No lockdown for moi

            I’ll bite. Let’s assume some evil ‘Murican airline takes over VS slots and runs them at capacity. APD – still paid. Fuel duty – still paid. That’s everything specific to airlines. I would wager the rest of the “lost tax” Virgin pays is insignificant compared to those.

            I agree HMG should act in the national interest. Propping up a 49% US owned airline stretches the definition a bit.

          • No lockdown for moi says:

            Back office jobs? High end jobs? Mgt jobs?

            And all the taxes associated with them remaining in the country of ownership/ main activity.

            Admittedly the plods who day-to-day run (say) a German-owned UK water co will be Brit plods and pay UK taxes. But the rest of the higher end workforce? And all the profitability ‘spirited away’ to Germany?

          • mr_jetlag says:

            @Heathrow Flyer “if you only save very profitable businesses you’re going to have a lot more Amazons and a lot fewer John Lewises going forward”

            Quite the opposite. JL has been profitable for almoat its entire history and Amazon has been lossmaking as a whole until recently. I would strongly support any bailout of JL as, unlike most airlines, their partnership model is actually sustainable.

            The less said about Amazon the better – if Branson is a wannabe Bruce Wayne then Bezos is Lex Luthor incarnate.

  • insider says:

    Should i spend all my VS miles trying to get a holiday on Necker Island? Should probably do it before the government claims it and every other sod in the UK can use their taxpayer miles to redeem.

  • @mkcol says:

    Just makes me wonder even more what to do with my stash of Flying Club miles.

    • ChrisA says:

      It would be very good if they provided with some idea as to the security of these miles.
      Despite my 150k miles being very hard won, I have been reluctant to convert to Hilton miles for a number of reasons.
      I think that I shall book myself some reward flights – ones which I would be happy to actually fly in such an event that the airline folded but the flights were still honoured, one way or another.

  • Spaghetti Town says:

    rob, have you jumped ship from Virgin flying club yet?

  • Harry says:

    “If you haven’t paid in to UK Plc .. you can’t expect to take out.”, is a great throw out. Sir Richard will survive quite nicely thank you whether Virgin Atlantic sinks or swims. That is why the world has Limited Companies. He would undoubtedly be emotionally bruised but live happily ever after he surely will do. The UK Government has a duty and an obligation to look after its citizens who work for Virgin. Do those who are jealous of Sir Richard think all those Brits should just be allowed to sink? So many of the comments both here and in other places are simply build on jealousy and hate for anyone who has money.

    • steve says:

      Ok then let the UK take a majority equity stake. No point in guaranteeing a loan that may never get paid back and then never have any dibs on the breakup value. Part nationalize any company that the UK government help. I am certainly not a communist however i think i should see a return on the taxes i pay and then effectively lend to fat cat companies that are poorly run usually for the benefit of their executives and large share holders

    • Josh says:

      Virgin Atlantic is a UK PLC and has paid taxes on profits in years when it made a profit…

      • AJA says:

        @ Josh Has it actually paid Corporation Tax? Or was it able to get group tax relief from other Virgin companies that have been loss making?

      • Nick_C says:

        Virgin Atlantic is not a UK PLC.

        A PLC is a Public Limited Company.

        Virgin Atlantic Airways Limited and Virgin Atlantic Limited are private companies, not PLCs.

        • Rob says:

          If we’re being picky, you can be a PLC and not publicly quoted. British Airways plc is a subsidiary of IAG for example.

    • Ken says:

      How about it’s not jealousy, but just dislike of aggressive serial tax avoiders who are grasping at the taxpayer in almost unseemly haste.

      There are businesses all over the place cancelling dividends or looking to raise funds from shareholders.

      He wants his cake and eat it, and wants the UK taxpayer to pay for it.

      • J says:

        I don’t care for saving Branson but I do care about all the people Virgin Atlantic employs. And the jobs they support in the UK at Airbus and Rolls Royce.

      • TGLoyalty says:

        Ken what tax has he avoided?

        Does he live in a tax haven. Yes What income does he draw that he has avoided tax on?

        Virgin Atlantic a UK Ltd company. Virgin Holding Group a UK Ltd company and these pay UK Taxes on any profits they make.

      • Harry says:

        Sir Richard will have his cake and eat it. The question is how many of his employees will even have a slice of bread if the UK government does not make a loan to Virgin Atlantic.

        • Lady London says:

          That’s Virgin’s point too.
          That’s the leverage all these grubby profit-are-ours and losses-we-need-government-support-for greedy foreign owned companies (and possibly foreign car companies?) are coming up with.

          Their message is “No, we ourselves are above tax. And miraculously our businesses never make a taxable profit in the UK…. or hardly any of our turnover. But if you, the UK government,don’t stop us from going under / contribute handsomely to our latest factory / bribe us to come, lots of people in the UK that DO pay their taxes won’t be employed by us. You choose, British government.

          The Faustian bargain of being a “hotel” economy,

          • mr_jetlag says:

            indeed – private profits, public losses. Tax the workers but not the bosses.

  • Opus says:

    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.

    • SL says:

      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.

      • Opus says:

        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

        • marcw says:

          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).

          • Rob says:

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

          • marcw says:

            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.

          • marcw says:

            @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).

  • 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.

        • Ziggy says:

          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…?

        • Ziggy says:

          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.

          • Ziggy says:

            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! 🙂