Virgin Australia bailout: Billionaire shareholders who won’t rescue airline

Chinese billionaires and oligarchs are among the shareholders who refused to rescue Virgin Australia, with the company forced to lobby for a $1.4 billion loan from the Australian taxpayer.

• Treasurer: ‘This is not the end of Virgin’
• PM: China must explain itself

Chinese billionaires, oil-rich oligarchs and foreign governments are among the shareholders who refused to bail out Virgin Australia, with the company forced to lobby for a $1.4 billion loan from the Australian taxpayer.

And the airline’s founder, billionaire Sir Richard Branson, charged Virgin Australia up to $150 million in fees to use the Virgin brand name, even as the Australian company fell deeply into the red.

Virgin Australia’s annual reports show that from 2004-2013, Virgin Australia paid fees totalling $102.7 million to Virgin Enterprises Ltd, a Branson company, for the right to use the Virgin brand.

Sir Richard Branson charged Virgin Australia up to $150 million in fees to use the Virgin brand name.

As Sir Richard’s shareholdings decreased to 10 per cent, Virgin Australia stopped reporting the payments in its annual reports from 2013. However News Corp understands those fees amounted to around $10 million a year, taking the total payments to around $150 million.

It’s believed Virgin Australia’s bosses felt the payments were good value for money, with the Virgin brand recognised globally, and Sir Richard enthusiastically promoting the airline in international and Australian markets.

Sir Richard Branson plays in the surf on Bondi Beach with a model during a Virgin launch.

Sir Richard, whose estimated wealth is $9.2 billion, has said he will mortgage his private island, located in the tax haven of the British Virgin Islands in the Caribbean, to raise funds to assist his battling international airlines.

He has said he is not charging brand licensing fees during the coronavirus downturn.

Sir Richard is just one of several billionaires with a major interest in Virgin Australia who will receive virtually nothing for their investment, with Australian private equity companies expected to move in on the grounded airline in coming days or weeks.

News Corp can reveal the full extent of the wealth behind the shareholders who held 90 per cent of Virgin Australia’s shares before the struggling airline called in the administrators on Tuesday morning.

The President of the United Arab Emirates, Sheikh Khalifa bin Zayed Al Nahyan. Picture: Getty Images

The eye-popping riches of several of the major shareholders shows why the Federal Government was so determined not to put taxpayer funds into a potential bailout.

“The Government was not going to bail out five large foreign shareholders with deep pockets who, together, own 90 per cent of this airline,’’ Treasurer Josh Frydenberg said on Tuesday.

One fifth of Virgin is owned by Etihad Airways, which is ultimately owned by the incredibly wealthy Al-Nahyan family, the royal family of Abu Dhabi, which has an estimated worth of $230 billion.

A luxury Vaucluse property owned by Jeremy Song.

Jeremy Song has built a multimillion-dollar property portfolio in NSW.

The family, which made its money from oil, is one of the wealthiest in the world, and has complete control of the government of Abu Dhabi, which wholly-owns Etihad Airways’ parent company, Etihad Aviation Group.

Sheik Khalifa bin Zayed Al-Nahyan, 72, is the hereditary leader and emir of Abu Dhabi. He is also the President of the United Arab Emirates. The Sheik’s personal wealth is estimated at around $23 billion.

Several Chinese billionaires own large parts of Virgin Australia, including Song Zuowen, the founder of the sprawling Nanshan conglomerate, which owns 20 per cent of Virgin.

Mr Song, 73, built an enormous empire which includes aluminium manufacturing, fashion and real estate development, and is ranked by Forbes as the 161st richest man in China with a personal wealth of $2.8 billion.

Song Zuowen, the father of Jeremy Song, is estimated by Forbes magazine to be worth $US2.8 billion.

Mr Song’s second son, “Jeremy’’ Jiamin Song, aged about 48, has Australian citizenship and has built a multimillion-dollar property portfolio in NSW.

Mr Song junior, who took over from his father as chairman of Nanshan Group in 2011, bought the Pullman Hotel at Sydney Airport for $84 million in 2015, and has purchased several trophy homes in Sydney in recent years, including St Malo, a six-bedroom mansion in Hopetoun Ave, Vaucluse, which he held for several years but sold in November for $9.1 million.

Nanshan also bought the Riverside Oaks Golf resort on the Hawkesbury River in 2009, and in 2017, purchased the neighbouring property, Sweven, the glamorous weekender owned by billionaire Bras N Things founder Brett Blundy for $18.75 million.

Virgin’s other Chinese owner is the HNA Group, founded by the billionaire businessman Chen Feng, 67, in 1993. Originally built around Hainan Airlines, operating from the resort-rich Hainan Island, it diversified and expanded into hotels, tourism and real estate development, with Mr Chen’s personal wealth estimates by Forbes in 2017 as reaching $2.8 billion.

Like most of the world’s airline companies, HNA is heavily indebted, and recently sold off its shares in Deutschebank and the Hilton hotel chain. Forbes took Mr Chen off its rich list in 2018 as the company’s fortunes wavered.

The Singaporean Government is the other 20 per cent owner of Virgin. The Singaporean Government’s investment company Temasek Holdings owns 56 per cent of the country’s flag-carrier airline.

It too is struggling under the coronavirus lockdown, and last month announced a $21 million bailout deal, with Temasek agreeing to underwrite the sale of shares and bonds to the value of $16.6 million.

Originally published as Virgin Australia bailout: Billionaire shareholders who won’t rescue airline