Richard Branson ‘fighting fires’ globally, delighted he roped Bain Capital for Virgin Aus

Billionaire Sir Richard Branson was ‘fighting fires’ across global operations during the pandemic and is delighted he brought Bain Capital on board to save Virgin Australia.

Sir Richard Branson might be best known for dare devil activities and his passion for space travel, but the British billionaire says he had to fight with all his might to keep his beloved Virgin Group afloat during the pandemic.

The 73-year old entrepreneur was “fighting fires” around the world when Covid triggered lockdowns because Virgin Group’s business ventures across airlines, cruise companies, fitness clubs and hotels are largely people facing.

In all, the group had 65,000 people potentially affected by the crisis.

“Up until Covid I’d really switched to spending 90 per cent of my time setting up not-for-profit ventures,” Branson told The Australian.

Once the pandemic hit, “I had to get back to hard work again to try to protect everything that I spent a lifetime building up, including down in Australia.”

Indeed the already heavily-indebted Virgin Australia collapsed during the pandemic, while in the UK Virgin Group spent £200m to help keep Virgin Atlantic afloat.

His calls for a bailout by the British government were rejected, with one politician tweeting, “flog your private island.”

Branson famously owns Necker island in the Caribbean, which is where he and his wife, children and grandchildren waited out the pandemic.

Branson, who is estimated to be worth £4.2bn has said he lost about £1.5bn as a result of Covid.

We are not as financially strong as we were, Sir Richard Branson says. He is seen here on the Sydney Harbour Bridge with the first Virgin Voyages cruise ship, the Resilient Lady arriving in Sydney this week. Picture: Jonathan Ng

“We are, as a group, not as financially strong as we were because the pandemic has cost the Group a lot of money, but I’m delighted to say that generally speaking, most people’s jobs were saved,” he said.

Virgin Australia was bought out of administration by Bain Capital. Virgin Group, which lost its 10 per cent shareholding along with all the other shareholders, tipped money back in again too. His company currently owns a 5 per cent stake and has one board seat with a licensing agreement that dictates specific rules around branding, at an annual fee paid by the airline.

Branson points to the fact that all staff working at Virgin Australia when it collapsed were offered jobs at the relaunched Virgin Australia.

“When Virgin Australia went, I sent a message to all our staff saying that I’d work day and night to make sure that it came back again and I was obviously delighted to have managed to get Bain on board – I put money in myself,” says Branson.

Bain is currently working on a proposal to relist Virgin Australia on the stock exchange for a mooted $3bn value with bankers targeting a May listing date.

Branson would not say what his stake will be post the float, but it is clear he has a strong affiliation with the country he travelled to annually before Covid.

He says his reduced shareholding since the relaunch of Virgin Australia hasn’t meant less connection to the airline.

“I would say that I’m just about as involved as I used to be,” says Branson. “I’ve spent a lot of time with Virgin Australia staff since I’ve been down here and spent time with Jayne and I’m still the biggest private shareholder in Virgin Australia.

“The brand is still attached to it. I love it dearly and love the people dearly and will fight to fight to look after the company.”

When Covid hit, Branson’s space company Virgin Galactic had just gone public and he was forced to sell down a big portion of his shareholding to have the cash to protect his other Virgin companies.

So what lessons has he learned from his near-death corporate experience?

For one the corporate structure of the Virgin entities means that if one fails, it doesn’t bring down the rest.

“From the Virgin Group’s point of view, ultimately, the only protection is from an absolute catastrophe is that we’ve got a lot of different limited companies and if we have to let one go, we just have to let it go to save the rest, but, but by and large, we do everything we can to avoid that,” says Branson.

In terms of business strategies and debt levels, his firms now take a more cautious approach.

“We are definitely running our companies now more to take into account the next war that breaks out,” Branson says. “We are equipped with a knowledge of pretty well the worst that can happen, and as much as we can, we’re trying to protect against the worst.”

Although the Branson of now is more circumspect that in years gone by, it’s clear he has moved back to the growth mindset.

The eclectic founder of Virgin Group is in Australia to launch his Virgin Voyages adults-only cruise ship brand and says he has other businesses on the boil.

“We’re back to expanding again and we’re looking at one or two exciting new ventures and, having a few months ago gone to space with Virgin Galactic, now I’m down here with the Virgin Voyages. Virgin is certainly not as financially strong as it was, but pretty well nobody is as strong as they were before Covid and our team is still creating wonderful, wonderful new ventures.”

As for his ability to return to not-for-profit ventures, Branson is looking at ones that connect with his own businesses. Achieving carbon neutral is one such challenge.

Virgin Atlantic did the first-ever long haul sustainable flight a week ago, flying from London to New York with 100 per cent sustainable fuel derived from cooking fat.

“That’s a very, very big important first step,” says Branson, who mentions a call he was on that morning with Rise Fund, which he helped set up with investors such as U2’s Bono.

Rise is currently looking a small firm that takes waste product from ethanol and then puts it through a hydrogen process to create jet aviation fuel.

“Entrepreneurs can spearhead the way, testing planes, showing that it can be done, and then nurturing small start-up companies to come up with the breakthrough technologies,” says Branson. “Then the governments need to mandate fuel companies to make enough fuel to satisfy aviation needs in the years to come.

Branson believes there is still a long path ahead for sustainable long-haul flights, but suspects short-haul sustainable flying will become more quickly commercially achievable.

As for exactly when Virgin Australia will be flying fully sustainable flights, Branson says it is still too hard to predict.

“I just don’t know, he says. “All I can say is that there are a lot of people working on it including Virgin Group. These things are going to take time on as far as aviation is concerned.”

Originally published as Richard Branson ‘fighting fires’ globally, delighted he roped Bain Capital for Virgin Aus