Sir Richard Branson is to defer tens of millions of pounds in fees owed by the hardest-hit Virgin-branded companies as the coronavirus pandemic decimates revenues across his leisure and travel operations.
Daily Week News has learnt that Virgin Enterprises Limited (VEL), the UK-based company which manages Virgin’s global brand licensing activities, is in talks to give some businesses set up by the billionaire a payment holiday for the duration of 2020.
The impending decision means that companies including Virgin Active, Virgin Atlantic Airways, Virgin Australia, Virgin Cruises and Virgin Holidays will not be required to hand over fees they pay to VEL for use of the Virgin brand – with some of the deferrals potentially lasting until next year.
One source said the prospective agreement reflected the particular strain on travel and leisure-related companies in which Sir Richard’s Virgin Group Holdings owns stakes.
16 March: Airline industry in crisis as companies ground their fleets
The move to shore up the cashflows of Virgin-branded businesses comes as Virgin Atlantic seeks several hundred million pounds of taxpayers’ support in the form of credit facilities and guarantees against money held back by credit card companies.
On Wednesday, Daily Week News revealed that industrial giants – all of which generate revenue from the transatlantic carrier – including Airbus and Rolls-Royce Holdings were lobbying the government to provide a financial aid package to the company.
Sir Richard disclosed last month that he was injecting $250m into Virgin-branded companies which had been hit by the pandemic, calling it “the most significant crisis the world has experienced in my lifetime”.
“There are more than 70,000 people across 35 countries who work in Virgin companies, all of whom have been deeply affected by the pandemic in different ways,” he wrote.
“Because many of our businesses are in industries like travel, leisure and wellness, they are in a massive battle to survive and save jobs.”
The tycoon added that the $250m investment was “likely just the start”.
“The chances of securing widespread economic recovery will depend critically upon governments around the world successfully mobilising various newly announced support programmes, which in these unique circumstances will be essential to protect people’s livelihoods,” he wrote.
Virgin Atlantic is the most prominent victim of the pandemic within Sir Richard’s portfolio, with the vast majority of its fleet grounded and thousands of staff asked to take unpaid leave.
Virgin Active gyms have had to close in the outbreak
Rival British Airways is planning to furlough tens of thousands of staff, while easyJet has also ceased flying.
Peter Norris, the chairman of Virgin Group, recently urged Boris Johnson to establish an industry-wide bailout strategy worth up to £7.5bn.
That request appears to have been dashed by Rishi Sunak, the chancellor, who has signalled that only “bespoke” aid will be available “as a last resort”.
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Sir Richard’s flagship airline is by no means the only Virgin-branded company to be hammered by COVID-19, however, with Virgin Active’s clubs shut down, and the launch of its cruise operation – which had been slated for this spring – delayed for months.
Companies in Sir Richard’s portfolio which are likely to be relatively unaffected by the crisis include Virgin Media, the pay-TV broadcaster and mobile phone network operator.
His group’s paper value has been dented, though, by the 70% fall in the value of Virgin Money during the last 12 months, with banks suffering from rock-bottom interest rates.
Virgin Group typically owns minority stakes in companies which use the brand, although Virgin Atlantic is an exception, with the billionaire continuing to control its equity.
A Virgin Group spokesman declined to comment.