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Billionaire Airline Owner Defends Call for U.K. Bailout

Posted on Apr. 21, 2020

Richard Branson, the billionaire owner of Virgin Atlantic, says U.K. government support is necessary to save the airline, and that he did not move to the no-tax British Virgin Islands for tax reasons.

In an open letter to Virgin employees, Branson stressed the need for government loans to prop up the struggling British airline, addressed criticisms of the company’s response to the coronavirus crisis, and defended his move from the United Kingdom to the British Virgin Islands.

“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,” Branson wrote in an April 20 post on the Virgin website.

News outlets have reported that Branson, whose net worth is estimated at $3.4 billion, is asking for a £500 million commercial loan from the U.K. government to bail out Virgin Atlantic.

Branson hasn’t paid personal income tax since moving to the British Virgin Islands 14 years ago. In his letter, Branson said that he and his wife did not leave the United Kingdom for tax reasons, but for their “love of the beautiful British Virgin Islands and, in particular, Necker Island.”

Branson bought Necker Island at age 29, and the private island now houses his family home and is run as a business employing 175 people. Branson said he will mortgage the island to raise money and “save as many jobs as possible” in the Virgin Group. Virgin Group has a 51 percent controlling stake in Virgin Atlantic.

A petition with over 60,000 signatures demanding that Branson sell all of his assets before receiving a government bailout started circulating on April 20. Branson's letter addresses calls for him to use his net worth to fund the bailout of his companies.

“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 wrote. “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.”

Virgin Group's parent company, Virgin Group Holdings Ltd., is registered in the British Virgin Islands. Alex Cobham, chief executive of the Tax Justice Network, was quick to point out in an April 20 Twitter thread that the British Virgin Islands ranks No. 1 in the organization’s Corporate Tax Haven Index for 2019. He said Branson hasn’t publicized what taxes Virgin pays and in which countries.

Branson said his 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.”

The Virgin empire has suffered under the coronavirus, with an 85 percent reduction in Virgin Atlantic flights per day. Branson defended the move of Virgin Atlantic employees taking unpaid leave for eight weeks spread over 6-1/2 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 [National Health Service],” Branson wrote.

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