Richard Branson’s Virgin empire has faced many challenges in its five-decade history, from high-profile legal clashes with British Airways and failed bids to run the UK national lottery to abortive forays into vodka, cola and bridal wear.
The setbacks have been so numerous that overcoming them has become part of the Virgin DNA. Yet the six-month battle to save Virgin Atlantic Airways has been a case apart, involving as it has the business that first truly took the group global and remains its best-known brand.
The battle to stop the carrier from becoming one of the highest-profile corporate victims of the coronavirus crisis was finally sealed on Wednesday after a UK court gave the go-ahead for a £1.2 billion ($1.6 billion) rescue built around a loan from private-equity firm Davidson Kempner Capital Management.
The hard-won financing package emerged as the last, desperate option for saving the carrier after it became one of the few worldwide to be refused state support when Britain denied it access to the £330-billion Covid Corporate Financing Facility, a fund tapped by half a dozen airlines.
The deal comes at a cost to Branson, who injected £200 million of his own money into the company, raised through the sale of shares in Virgin Galactic Holdings, the orbital tourism venture that had become his obsession in recent years.
“Branson has shown that he has a real attachment to Virgin Atlantic,” said Stephen Furlong, an airline analyst at Davy Stockbrokers in Dublin. “It’s also central to the strength of the Virgin brand and its ability to generate royalties.”
Branson had said he had little money on hand to fund struggling brands, arguing that he was asset rich but cash poor after extracting little “significant” profit from Virgin and plowing proceeds into new businesses.
With the UK government demanding that Virgin Atlantic exhaust all options for private financing before it would consider any form of assistance, he had no option but to weigh asset sales, while asking Shai Weiss, the carrier’s chief executive officer, to begin a search for outside funding.