LONDON: In an open letter to Virgin Group employees, company founder Richard Branson said he would offer the private islands he owns in the Caribbean as collateral to save the airline and hospitality company, which is in financial straits during the coronavirus pandemic.
Branson’s conglomerate operates in some of the hardest-hit sectors, including aviation, hotels and cruises. The billionaire tried to dispel criticism about asking for government aid despite his massive personal wealth. “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,” Branson writes.
“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,” the mogul continued.
Richard Branson, who founded Virgin Atlantic, is now asking the U.K. government for bailout money. He currently lives in the Virgin Islands and does not pay taxes in Britain.
The company, which employs more than 70,000 people in 35 countries, has reduced wages for Virgin Atlantic employees, which Branson said was a decision to save as many jobs as possible. To keep the airline from going under, he said the company will need support from the U.K. government.
But critics point out Branson has paid no U.K. income tax since moving to the tax-free British Virgin Islands 14 years ago.
The British government has announced two plans to help lessen the financial burden of this pandemic on U.K. companies: The first is a £330 billion or around $400 billion coronavirus support package for the economy, and the second is a £1.25 billion,more than $1.5 billion package to support new companies and startups that are not eligible for existing coronavirus rescue plans.
It appears Branson anticipated his offshore tax havens might impede his request for U.K. aid, because in his open letter, he made a point of saying that he and his wife did not leave Britain for tax reasons instead, he insists, it was because of “our love of the beautiful British Virgin Islands and in particular Necker Island, which I bought when I was 29 years old.”
Although the letter was addressed to “all the Virgin family,” it appears to be a case for getting a business loan from the British government.
Branson wrote: “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 U.K. pay tax in the U.K., and so forth.”
Branson said Virgin Atlantic faces uncertainty surrounding travel today and would like 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),” he wrote.
The global airline industry has experienced never-before-seen plunges in revenue during the coronavirus recession, worse than what it was after 9/11.
