“Virgo likes to take seemingly insurmountable problems, and try to overcome them,” he said in 2018.
But these days, Branson’s business empire is facing what could be its biggest challenge yet.
Virgin Atlantic last week introduced US bankruptcy protection as part of a $ 1.5 billion recapitalization plan to maintain solvency amid its worst economic downturn ever. The airline’s operations are ongoing, though it does not expect to be profitable again until 2022. Virgin Australia sister company is also undergoing a restructuring under its new owner, Bain Capital.
In response to the crisis, Branson has invested in troubled businesses, which could mean less resources for bold new ventures, at least in the short term.
(Virgin Group is a UK-based investment and branding company operating as Branson̵
7;s private equity firm.)
At the same time, 2020 was to be a big year for Branson space trading company Virgin Galactic (SPCE), raising stakes for his success.
Virgin Galactic has been a success story on Wall Street this year despite the fact that it is still not profitable. Galactic plans to make Branson himself the first non-crew member on a company space flight early next year – a risky bet but one that, if successful, could attract more passengers and drop great opportunities for the space travel business.
“It’s definitely a very bold move, but you have to respect the skin in the game that Branson is putting in, being the first person to do it,” said Ark Invest analyst Sam Korus.
Virgin Group has so far invested more than $ 350 million in its companies while reducing the coronavirus crisis, and that amount continues to grow, according to a company spokesman. The spokesman also noted that Virgin has in recent months made investments in its satellite business, Virgin Orbit, which started producing fans to help address the country’s shortage during the pandemic.
The pandemic has devastated the travel industry and experts do not expect significant improvements without an effective vaccine or treatment Covid-19. Even when (or if) the virus subsides, there may still be financial and other barriers to travel – in a recent survey by the International Air Transport Association, 66% of respondents said they would travel less for leisure and business in a post-pandemic world.
In April, Branson asked the governments of the United Kingdom and Australia for financial assistance to Virgin Atlantic and Virgin Australia, “in the face of severe travel uncertainty”. In an open letter to employees, Branson said the survival of the two airlines is important to competition in the industry.
At the time, Branson’s Virgin Group had already poured $ 250 million into the company in response to the pandemic. He even offered his assets on Necker Island in the Caribbean as collateral “to raise as much money against the island as possible to save as much work as possible around the group”.
Virgin Group includes more than 35 companies and employs more than 60,000 people worldwide.
The UK government rejected Virgin Atlantic’s request for a trade loan. In July, the airline unveiled a $ 1.5 billion restructuring deal to remain solvent, just days before it resumed passenger flights. As part of the deal, Branson’s Virgin Group is contributing milion 200 million ($ 262 million).
Last week, Virgin Atlantic filed for bankruptcy protection in Chapter 15 in New York, which houses the U.S. assets of foreign companies that are undergoing restructuring procedures in their home country. The company has laid off more than 3,500 employees and closed its base at Gatwick Airport in London, but says it “remains safe” in its recapitalization plan.
Virgin Australia was also unable to secure direct financial support from the Australian government – it entered voluntary administration in April and was sold to US private equity firm Bain Capital in June.
Virgin’s other travel companies are in a similarly complex location.
Branson in February launched his luxury cruise line, Virgin Voyages, which would sail for her first Caribbean tour in April. But then the coronavirus pandemic hit and brought particularly bad PR to the navigation industry in its early days, as some ships became coronavirus hotspots.
A group of cruise line operators, including Virgin Voyages, said last week they agreed to suspend cruise operations in the US until at least Oct. 31 as coronavirus cases in the United States continue to rise.
Even after cruising resumes, Virgin Voyages may struggle to attract the kind of wealthy young adult travelers she hoped to take care of. Ticket prices for a three- to four-day voyage on Virgin’s first ship were set to range from $ 1,600 to $ 19,000 – a big question at any point, but especially in the scratches of one of the worst economic downturns in U.S. history.
Virgin Group has released health and safety information – including cleanup procedures and social distancing guidelines – for its cruise, airline, fitness and hotel businesses.
“Virgin companies across the globe are implementing various security initiatives so that you can travel, play, stay well,” the company says on its website.
The future of the Virgin
Even as the rest of Branson’s business empire is thrown away, Virgin Galactic remains a shining place.
Despite an extremely turbulent year for Wall Street, Virgin Galactic shares have risen nearly 55% since January as the company works to launch commercial space tourism operations. Galactic debuted on the New York Stock Exchange in 2019, following a deal that gave new investors a 49% stake in the company.
In recent months, Branson has sold hundreds of millions of dollars in Virgin Galactic shares to turn money into traditional Virgin travel businesses, Bloomberg reported. Shares of Virgin Galactic plunged shortly into May after Virgin Group announced it would sell up to 25 million shares of Galactic to support wider business, potentially signaling investor concern about slowing investment in space ventures.
Virgin Galactic plans to send paying groups of customers on short, scenic flights to the edge of space, where they will swim weightlessly for a few minutes while watching the cosmos through the windows of the plane. Tickets for the trip cost about $ 250,000.
The company said earlier this month it had received more than 700 deposit payments for space flight tickets since June 30th. Branson is expected to be the first non-crew member to fly over the company’s suborbital vehicle, SpaceShipTwo, early next year. (The vehicle can carry eight people, including two pilots.)
Virgin Galactic is not expected to be hit hard by the pandemic because the extremely wealthy clients it seeks are less likely to be harmed by the economic crisis, said Ark Invest’s Korus.
“Space is an extremely interesting area right now, a lot of things that people thought were impossible are proving possible,” Korus said. “Of course there is still a great deal of risk, but if [Branson’s] “The flight is successful in the first quarter of next year, this concept of space tourism is disconnected and endangered.”
Galactic has also been working to redefine its missile technology in an air travel business that locks people between cities at record speeds, a business area that could also have huge profit potential. Korus has predicted that such an industry could eventually grow to nearly $ 300 billion in annual revenue.
He said the success of Virgin Galactic while fighting other travel-related businesses could represent a kind of “guard shift” in the way people think about the future of travel.
“Innovation takes place at great times,” Korus said. “No one wants to invest in new technology when all goes well … but as soon as that crisis exists, it ensures that the catalyst invests in new technologies.”