I'm a mere amateur, of course
.. but is this not cross-subsidising?
Richard Branson last week offloaded 10.4 million shares of Virgin Galactic, worth US$300M, to prop up his other businesses including pandemic-damaged airline Virgin Atlantic. It is the third time Branson’s shifted millions of dollars of Virgin Galactic’s shares since it listed on the New York Stock Exchange in 2019. A …
That a private-equity firm has $1.6 billion to loan is understandable.
That it decides to give that money to an airline in these times is much less.
Airlines have taken a major battering and, although air travel is on the upswing, it is not back to pre-COVID levels.
I think that is a major risk. The interest on that loan must be very high.
I'm pretty sure if you go through the hundred offshore shell companies that probably form part of the private equity group, his name will be behind some.
One of the reasons Vigin Airlines needed a bail out is because they were paying millions to Virgin the brand the rights to use the name.
There is no Virgin Airlines. There's a Virgin Atlantic and a Virgin Australia. If you want to spout a bunch of rubbish that's meant to sound like facts, at least get the names right. So which airline are you referring to here? Virgin Atlantic is still 51% owned by Virgin Group, so... is it Virgin Australia?
Virgin Galactic, Virgin Orbit, Vox Space
Galactic sold hundreds of tickets years ago but I cannot find a date for the next launch (2022?). Orbit has put NASA payloads in orbit. Vox (subsidiary of Orbit) has a contract for 3 US military launches. Small satellite launch is a difficult market to get into. Getting to orbit and getting contracts are both huge hurdles that few have or will successfully leap despite the large number of companies trying. I am not sure if there is a pea, but if there is I would not bet on it being under the Galactic shell unless they can show regular progress on their backlog of potential space tourists.
(VG: $450,000. BO: $(will announce at some point). Various Vomit Comets: ~$5000. Axiom (Crew Dragon): ~$55M + ISS air, food and water bills)
I'm glad to see that he's not relying on State handouts.
He tried to though:
Branson sold Virgin Galactic shares back in May 2020 to keep the airline operating and in September 2020 the company received $1.6B loan from private-equity firm Davidson Kempner after the UK government refused to provide Virgin Atlantic with emergency support.
Spaceport America cost New Mexico tax payers about $200M. The space port started before Virgin Galactic got involved but did not get serious funding until VG promised to make it their head quarters. The exterior was completed in 2011. Revenue from VG was $2.7M up to November 2014. VG completed their interior work in 2019. They might start paying regular fees in 2022.
It would be unfair to call all $200M a handout to VG because Spaceport America has found other tenants but VG were supposed to be the anchor tenant.
All the other billionaires are currently borrowing like crazy against their current assets (including shares in their own companies) so that they are in debt and can pay next to no taxes at all. And because they are not selling anything they avoid capital gains taxes.
(ref: https://inequality.org/great-divide/americas-billionaires-borrowing-their-way-to-ever-more-fabulous-fortunes/ )
In the last 16 months the top 15 billionaires have increased their wealth by a cumulative total of 1.763 trillion (an increase of about ~60%).
(ref: https://inequality.org/great-divide/updates-billionaire-pandemic/ )
Which makes me wonder, why is Branson selling assets, what is the tax avoidance twist or is there some another angle ??