back to article Branson sews cash parachute for Virgin Atlantic with $300m Virgin Galactic share sale

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 …

  1. Anonymous Coward
    Anonymous Coward

    I'm a mere amateur, of course

    .. but is this not cross-subsidising?

    1. Graham Dawson Silver badge

      Re: I'm a mere amateur, of course

      No, that would involve taking revenue from one company and putting it into another. This is Branson selling his own assets generate funds that he then invests into another of his companies.

      1. Anonymous Coward
        Anonymous Coward

        Re: I'm a mere amateur, of course

        Ah, thanks for the clarification. Finance is clearly not my thing..

  2. Pascal Monett Silver badge

    a private-equity firm

    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.

    1. IGotOut Silver badge

      Re: a private-equity firm

      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.

      1. anothercynic Silver badge

        Re: a private-equity firm

        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?

    2. Gordon 10 Silver badge
      Meh

      Re: a private-equity firm

      Don't think so. Its more a sign of the price of credit being at record lows due to central bank interventions.

      Besides investing just *before* a big upturn hits is what every investor wants to do. (Leaving short sellers aside).

    3. John Robson Silver badge

      Re: a private-equity firm

      Or you need to just keep the airline afloat whilst others fail, then make profit once the pandemic's effects on travel are reduced

  3. Flocke Kroes Silver badge

    Three shells ...

    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)

    1. Jim Mitchell

      Re: Three shells ...

      It would suck to have a Virgin Galactic ticket, then show up for the flight and find your actual carrier is Virgin Orbit. No windows!

      1. John Brown (no body) Silver badge

        Re: Three shells ...

        That'd be RyanSpace. Windows and air, optional extras. And it may not go as close to the named destination as you expect. Taxis or buses may be involved.

        1. ravenviz Silver badge

          Re: Three shells ...

          Plus supply your own Captain Archer stylee jumpsuit!

  4. anthonyhegedus Silver badge

    I'm glad to see that he's not relying on State handouts.

    Also.. Capitol? I think you meant capital.

    1. Korev Silver badge
      Alien

      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.

    2. Flocke Kroes Silver badge

      Handouts

      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.

  5. Gordon 10 Silver badge

    bait and switch

    This seems like a bit of a (legal) bait and switch to me. Sell stock in the highly valued (but ultimately pointless) space tourism start up to fund the lowly valued (but viable 4 years outa 5) international aviation business.

    Markets & investors are weird.

    1. Charlie Clark Silver badge

      Re: bait and switch

      The article certainly helps muddy the water here in not clearly differentiating between Richard Branson and the various financial entities. He is making personal investment decisions in distinct companies that only share branding and some shareholderrs.

  6. Bartholomew Bronze badge
    Holmes

    Why is he selling ?

    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 ??

    1. anothercynic Silver badge

      Re: Why is he selling ?

      Or maybe there is neither.

    2. mark l 2 Silver badge

      Re: Why is he selling ?

      Doesn't he live on his own island in the Caribbean? So he probably pays next to no tax on the sales of the shares through all sorts of creative accounting.

  7. StrangerHereMyself Bronze badge

    Help him

    I believe Branson deserves our help, since he almost risked his fortune to get into space.

    I'm planning to buy some stock, if I can find it.

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