Why is Virgin Airlines bad

Billionaire Richard Branson begs the British government

When Virgin Records signed the Sex Pistols in 1976, their enterprising manager Malcolm McLaren is said to have mistaken the label's owner, Richard Branson, for a "naive hippie". Later, writes the magazine "Spiked", he was speechless about what a shrewd and ice-cold businessman Branson actually was.

Now the shining prodigy of British business has come under fire for precisely that reason. The 70-year-old multibillionaire had asked the employees of the Virgin Atlantic airline, of which Branson is majority-owned, to take eight weeks of unpaid leave. At the same time, however, the airline has advertised a state rescue package for the British aviation industry in the amount of 7.5 billion pounds (the equivalent of around 8.6 billion euros).

The aviation industry is hardest hit by the measures taken to combat the coronavirus pandemic, alongside retail and the hotel and restaurant industry.

Entrepreneurs support Branson

Branson is not alone in his request. The British low-cost operator Easyjet has also demanded unpaid leave from its employees and called for government aid to avoid hundreds of layoffs. At the same time, the company even announced plans to distribute £ 174 million in dividends to shareholders. 60 million of these went to the Cypriot founder and shareholder Stelios Haji-Ioannou, reports "The Times".

Virgin Atlantic Jet in London Heathrow: Employees should take unpaid leave

United Labor and Tory politicians

Critics argue that Branson has not paid income tax since moving to the tax-exempt British Virgin Islands 14 years ago. There, on the edge of the Caribbean, he lives on his private island Neckar Island. He also does not have to pay tax on the dividends that Branson receives from the companies in his Virgin Group.

Labor MP Kate Osborne, the second British politician to test positive for COVID-19, called Virgin Antlantic's decision an "absolute shame". Conservative MP Richard Fuller calculated how easy it should be for Branson to pay his employees to the British Parliament: if all 8,571 employees went on vacation for eight weeks, it would cost £ 6.4 million. On his net worth of £ 3.8 billion, Branson would receive interest of £ 9.9 million in those eight weeks at an interest rate of two percent. "So I say, Sir Richard Branson, forego eight weeks of interest on your property and pay your employees unpaid leave yourself."

British Treasury Secretary Sunak: "No special treatment for airlines"

Despite all the hardships, the British Finance Minister Rishi Sunak gave the request a clear rejection in March: There would be no special treatment for airlines. They should raise money from their shareholders and explore other options before asking for government aid. They are the very last resort.

Branson's empire is battered

In fact, Branson has proposed putting $ 250 million into the Virgin Group - the holding that includes the airline and record label. How much this will do the airline is questionable, because other Virgin divisions belong to the hotel and tourism industry.

On March 5, the British regional airline Flybe went bankrupt, which Virgin took over as part of a three-party consortium in January to save it from bankruptcy. On March 14, Virgin Voyages announced that the maiden voyage of the "Scarlet Lady", the first ship of the new cruise line, would be postponed indefinitely.

The airline Virgin Atlantic founded Branson in 1984, he holds 51 percent of the shares. Over the 2017 and 2018 financial years, the airline posted losses of 75 million pounds (around 86 million euros). At the end of 2018, the debt was about three times as high as the reserves. The other 49 percent belong to the US airline Delta, which is currently losing $ 50 million a day due to the COVID-19 measures. The rating agency Standard & Poor's has downgraded Delta bonds to junk status.

Entrepreneurial talent or financial vulture?

With his Virgin Group, Branson has created a veritable brand empire - with airline, tourism and record companies, but also cosmetics, soft drinks, radio stations, a railroad company, retail, wireless and financial offerings. In 2014, the Virgin Group was involved in 200 companies in 30 countries. And the dazzling brand name "Virgin" is always on it. Branson's business model is also called "branded venture capital", for example: venture capital with brand names.

But the various companies did not always appear positive. The British health service Virgin Care, for example, has been accused of snatching orders worth two billion pounds from the national health service NHS and local public providers. But now you are operating in deficit and not even paying corporate taxes. Activist John Lister attributes a parasitic role to Virgin Care because it attracts trained staff from the NHS and divides the health service in the country.

For some critics, the red brand color was a red cloth even before the Virgin airline called for state aid.