Words: Tom Ward
In 2011 the Great House, part of the $10 million Necker Island retreat owned by Richard Branson, caught fire after being hit by lightning during Tropical Storm Irene. Among the 20 guests who escaped unharmed from the fire was the actress Kate Winslet who reportedly carried Branson’s then 87-year old mother from the flames. Six years later, in September 2017, Hurricane Irma hit the island, destroying most of the infrastructure.
“I have never seen anything like this hurricane. Necker and the whole area have been completely and utterly devastated,” Branson said at the time.
Before Branson bought the island for $120,000 in 1978 (he now charges from $3,500 per room per night, or $87,500 to book the entire island), Daily Telegraph journalists Don McCullin and Andrew Alexander spent 15 days of a planned three weeks on the island for an article having “hoisted the red flag” due to the inhospitable conditions. According to McCullin, “The mosquitos and other insects were more venomous and persistent than any I had encountered in Vietnam or the Congo.”
All of which begs the question why would the British Government consider the hurricane-prone tropical island as collateral against a £600 million loan to bail out Branson’s struggling Virgin Atlantic airline? Yet this was exactly the proposal floated by Branson this April as Virgin Atlantic took a massive blow when coronavirus grounded air travel.
Reports that Branson has sold more than £400 million worth of Virgin Galactic stock in order to save the airline suggest a desperate bid to save the company, possibly at the expense of Virgin’s space-bound future.
Necker Island, the beautiful but hurricane-prone private island belonging to Richard Branson
Branson’s early life offered subtle foreshadowings. His mother, Eve, was, among other professions, an air hostess (his father, Edward was a barrister). And, graduating school in 1966, his headmaster told Branson (who suffered from dyslexia) that he would either end up in prison or a millionaire. Today, his net worth is estimated in the billions, not millions.
His first business ventures saw Branson attempting to sell Christmas trees and pet budgies, but it was the launch of Student magazine in 1966 that saw Branson’s career take the first cautious steps towards flight. Using the magazine to sell albums at a more competitive price than the high street, Branson saw his net worth rise to £50,000 within a year of the publication of the first issue in 1968. Three years later, he opened his first record shop on Oxford Street. A record label, Virgin Records, launched a year later, so-named because as a company they were ‘virgins’ in the world of business.
Its virgin status didn’t stop Branson signing acts like the The Sex Pistols, The Rolling Stones and Paula Abdul – savvy business moves that saw it become the world’s biggest independent record label by the early ‘80s.
The story of how Virgin Airlines first took off owes a debt to Branson’s peculiar style of eccentricity. Stranded after a cancelled flight en route to Puerto Rico, Branson chartered a private plane and offered the other passengers a lift. Naturally, he diversified and formed Virgin Atlantic Airways in 1984, selling his record label to EMI for £500 million in 1992 in order to keep the airline afloat, again pre-shadowing measures taken this year to save Virgin Atlantic once again.
“My interest in life comes from setting myself huge, apparently unachievable challenges and trying to rise above them… from the perspective of wanting to live life to the full, I felt that I had to attempt it,” Branson wrote of his decision to start an airline in his autobiography, Losing My Virginity.
In 1993, he expanded yet again to launch Virgin Trains. Not content with having cornered the terrestrial travel market, Branson announced commercial space flights via Virgin Galactic in 2004 and Virgin Media in 2006. Among his many, many other ventures Branson also set up (deep breath) Virgin Comics, Virgin Healthcare, Virgin Express, Virgin Fuels, The Virgin Green Fund, Virgin Hotels, Virgin Racing, Virgin Bets, Virgin Wines and many more, alongside failed ventures including: Virgin Cola, Virgin Cars, Virgin Publishing, Virgin Clothing and Virgin Brides.
Somewhere along the way, Branson became a celebrity too. The late ’90 and early 2000s arguably saw Branson reach the peak of his renown, viewed at the time as a billionaire bon vivant known for the (deeply unsavoury) habit of hoisting female staff members like prizes during photo opportunities and trying to pilot various hot air balloons around the globe. With his blonde locks, goatee and guest appearances on popular shows like Friends and Baywatch, Branson positioned himself as an eccentric uncle figure, an Uncle Oswald to the nation.
Today, he’s having a somewhat tougher time of it. As of March 2020 global air travel had reduced by 60%, throwing many companies into difficulties, including Virgin Atlantic.
“Over the five decades I have been in business, this is the most challenging time we have ever faced… From a business perspective, the damage to many is unprecedented and the length of the disruption remains worryingly unknown,” Branson said after asking Virgin Atlantic staff to take eight weeks unpaid leave.
“Virgin Atlantic has 8,500 employees and Branson has asked them to take eight weeks unpaid leave. It would cost £4.2 million to pay all of these employees £500 a week to cover this leave. In total that’s a cost of £34 million for eight weeks,” author Liam Young pointed out in a tweet at the time.
With Branson’s own fortune estimated at around £3 billion it seems clear that what would amount to a vital source of income to his employees would be of relatively little import to Branson himself. His plea to the UK government for a £600m business loan to help save the airline was also met with derision, especially so considering that in 2013 Branson described himself as a “tax exile” from the UK.
In an open letter to his staff, Branson defended his request, explaining that the company had already committed $250 million to protecting the company, but that further financial input was required.
“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,” he wrote, also claiming that the eventual eight week wage cut was decided on by Virgin employees themselves and their unions in order to save jobs.
He also addressed criticism after it was revealed that Virgin Money Giving took fees while processing donations to the NHS during the coronavirus crisis, pointing to the Virgin umbrella’s various charitable endeavours and claiming “Virgin Money Giving never makes a profit and never will”.
Might Branson have an unlikely saviour in Virgin Galactic?
Putting aside airline troubles for the time being (as Branson no doubt wishes he could) it seems that the future of the company may rest with Virgin Galactic – that is, if Branson isn’t forced to sell off more stock first.
Despite the recent financial setbacks, 16 years into its journey to the stars, the company launched its first successful passenger flight into orbit in February 2019, a sign that, before the world’s economy was derailed, everything at Virgin Galactic was finally on track.
Naturally, Virgin Galactic isn’t the only company trying to commercialise space. But while Virgin Atlantic and British Airways conducted a public feud for many years (resulting in a court case in which BA had to pay $945,000 to Virgin Atlantic), Branson’s competitors in the space industry seem more supportive, especially Space X founder Elon Musk who offered commiserations after the launch of a Virgin Orbit rocket failed.
“Sorry to hear that. Orbit is hard. Took us four attempts with Falcon 1,” Musk tweeted.
Billed as the ‘premiere satellite launch service’, Virgin Orbit complement’s Virgin Galactic ambitions to expand Branson’s business endeavours to a higher plain. According to the experts, it isn’t pie in the sky, either. Speaking to BBC News, Will Whitehorn, head of trade body UKSpace claimed Virgin Orbit was ‘just as significant’ as Space X.
“If the coronavirus has taught us anything it is that our world is changing and space is going to be a big part of that,” Whitehorn said. “We could put so much industry outside the atmosphere… It all comes down to the cost of access to space and that will be revolutionised by this kind of system.”
Should Virgin survive the coronavirus crisis – and let’s face it, it seems likely it will, Branson is no stranger to jettisoning failing business, after all – it seems that Virgin’s Orbit and Galactic may be able to take Branson’s empire higher than jet planes and hot air balloons ever could. Should these endeavours fail too and Branson find himself in need of new diversions, well, we hear Necker Island is nice this time of year.
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