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Virgin’s Richard Branson accused of double standards during coronavirus crisis

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When Virgin Records signed The Sex Pistols in 1976, the band’s Machiavellian manager Malcolm McLaren reportedly took the label’s owner Richard Branson for a “naive hippy.” But the Scot was soon taken aback at how ruthless and canny he was, according to Spiked magazine. This may not be the worst caricature of the grinning 70-year-old wunderkind of British business.

The billionaire has come under heavy criticism recently after his airline, Virgin Atlantic, requested its staff take eight weeks unpaid leave during the coronavirus pandemic. At the same time, Virgin Atlantic, in which Branson owns a majority stake, also called for a 7.5-billion-pound (€8.6-billion, $9.4-billion) bailout for the airline industry as a whole. UK-based Virgin plans to ground up to 85% of its fleet at points in April. 

Airlines, retail and the hospitality are among the worst hit sectors as the global economy stops. Stelios Haji-Ioannou’s Easyjet also demanded staff take unpaid leave and asked for huge state aid to help avoid making hundreds of people redundant. The firm also simultaneously confirmed plans for a 174-million-pound dividend payout to shareholders, including 60 million pounds for Haji-Ioannou himself, The Times reported. 

Branson has the backing of Airbus, which makes Virgin’s planes, and Rolls-Royce, which makes its jet engines, who have warned that if the airline collapsed it could drag them down too. Manchester Airports Group chief Charlie Cornish added his name to the list of travel industry bosses that want Virgin to survive.

A Virgin Atlantic and Easyjet plane ready for takeoff at London's Gatwick airport

A Virgin Atlantic and Easyjet plane ready for takeoff at London’s Gatwick airport back in 2018

Politicians united

But many point out that Branson has not paid personal income tax since moving to the tax-free British Virgin Islands 14 years ago. Meanwhile, dividends sent to Branson on Necker Island, where he lives, are not subject to any taxes.

Opposition Labour Party lawmaker Kate Osborne, the second British politician diagnosed with the coronavirus, said Virgin Atlantic’s decision was “an absolute disgrace” and a Conservative MP set out how easy it would be for Branson to pay his staff. Richard Fuller told the Commons that eight weeks at the 94 pounds statutory sick pay would cost 754 pounds per employee.

There are 8,571 employees at Virgin Airlines, so if all of them took eight weeks’ unpaid leave that would cost 6.4 million pounds. “Sir Richard Branson’s net worth is $3.8 billion. If he’s able to get 2% interest on that money for eight weeks, he will earn the equivalent of 9.9 million pounds. So I say, Sir Richard Branson, give up your interest on your wealth for eight weeks and pay your employees yourself their unpaid leave.”

Virgin’s demands

Branson then offered to put $250 million of his own cash into the Virgin group to show the government his good will, though it isn’t clear how much of that would be for the airline as Virgin as a group is not doing so great, including its hotels and health clubs. 

Branson’s business empire has been hit hard by the coronavirus pandemic. On March 14 the Virgin Voyages cruise ship operation postponed the launch of its Scarlet Lady cruise line and on March 5 British airline Flybe collapsed due to weakened demand because of the COVID-19 outbreak.

Flybe, which once was Europe’s largest independent regional carrier, narrowly avoided collapse in January, after being bought by Cyrus Capital, Virgin Atlantic and Stobart. Virgin Galactic, Branson’s publicly traded space tourism arm, has also seen its shares slump.

The aircrew of the first commercial flight of the Boeing 747 from New York to London for Pan American

5 decades of flying high: Boeing 747

A wide-body wonder

Though its maiden flight was on February 9, 1969, the Boeing 747 actually entered commercial service nearly a year later with a Pan Am flight from New York to London. This first flight was originally scheduled for the 21st, but was delayed due to mechanical problems. With a nearly seven-hour delay — and replacement plane — history was made when on January 22, 1970 the 747 took off at 1:52 a.m.

The interior of an early Boeing 747

5 decades of flying high: Boeing 747

A fabulous interior

The first Boeing “jumbo jet” had a list price of $23 million according to contemporary reports. It was a true American invention and was assembled just outside Seattle in Everett, Washington, had 11 doors and room for up to 362 passengers. But it was the amazing roomy interiors with high ceilings that captured the imagination of travelers from around the world and made it so special.

Gloria Swanson is seen in the 1974 disaster film Airport 1975 - Timothy A. Rooks

5 decades of flying high: Boeing 747

Glamour in the skies

Within a month of its first flight, Pan Am added more flights connecting San Francisco, Los Angeles, Tokyo and Hong Kong. Soon other international airlines rolled out their own 747s. By June 1970, Boeing had orders for nearly 200 of the aircraft. The comfortable planes attracted the rich and famous. Here Gloria Swanson is seen in the 1974 disaster film “Airport 1975” also staring Charlton Heston.

Joseph Sutter, head of Boeing's 747 design team, in 2005

5 decades of flying high: Boeing 747

Designing for the blue beyond

At the time not everyone was sold on the idea. Many feared there was no market for such a large plane and that it would be impossible to sell so many tickets to fill all the seats. Others worried that airports were unfit to handle the increased number of passengers all at once; how could so much luggage be loaded and unloaded? Still Joseph Sutter, head of the 747 design team, stuck to his plans.

One of a Boeing 747's massive engines

5 decades of flying high: Boeing 747

Powered by four turbofans

To start the “second jet age” the new 747s needed to be big, but also powerful. Its four engines were not made by Boeing but by Pratt & Whitney, a subsidiary of United Aircraft Corporation. They were the most powerful jet engines ever produced up until that time and generated an amazing 46,000 pounds of thrust to propel it 600 miles an hour — just what was needed for long transatlantic flights.

A Boeing 747 landing in Abu Dhabi

5 decades of flying high: Boeing 747

Is bigger always better?

At first most airports were not prepared for such a massive jet, one that was well over twice the size of the Boeing 707. Runways needed to be lengthened and reinforced for the plane’s 350 tons. Others needed to invest millions in new, bigger check-in areas, more waiting room and baggage capacity. One consequence of bigger planes was the entrenchment of the hub-and-spoke model for airlines.

Air Force One - an altered Boeing 747

5 decades of flying high: Boeing 747

The most famous 747

Air Force One, the American president’s wings, is the most famous 747 to ever take off. In reality two 747-200s, the aircraft is only called AFO when the president steps onboard. Delivered in 1990, the planes are specially equipped and can be used as a flying White House. Though their paintjob is instantly recognizable, they are soon to be replaced with new 747-8s at a cost of over $3 billion.

A Boeing 747-8

5 decades of flying high: Boeing 747

An icon through and through

Over the years the plane has gone through updates. Gone are the bars and many of the other luxuries that once filled parts of the jet like grand pianos. Versions were lengthened and seats were reconfigured. The 747-400 can squeeze in 524 passengers. Still airlines looked elsewhere. In the US Delta was the last company to fly the passenger giants and even they retired the last one in December 2017.

class=”teaserImg”> A Lufthansa Boeing 747

5 decades of flying high: Boeing 747

A slow decline

In other parts of the world, the 747 is still in commercial service. British Airways has the largest fleet in operation. Yet slowly but surely after years of setting passenger records, the original jumbo jet also known as the “Queen of the Skies,” has continued to fall out of favor compared with newer, more fuel efficient planes. In the last decade orders have been low even for cargo versions.

The Pan Am Lounge in Berlin

5 decades of flying high: Boeing 747

Pan Am lives on in Berlin

In 2019, no new 747s were ordered at all, though seven were still delivered. In all, over 1,550 have been made in the past five decades. Nonetheless, the heyday of the second jet age and Pan Am’s double-deck glamour days is still alive at the Pan Am Lounge in Berlin. Still decorated in its classic 1970s style, today it’s a private club full of nostalgia and can be rented out as a party location.

Author: Timothy Rooks

Government the last resort?

British Finance Minister Rishi Sunak told airlines in March that the government would give them no special support. He said airline companies should raise money from shareholders and “exhaust other options” before asking for state help, which would only be there as “a last resort.” 

Branson founded Virgin Atlantic in 1984 and has a 51% stake alongside US airline Delta with 49%. Virgin Atlantic lost over $100 million in 2017 and 2018, the two most recent years for which its accounts are available. Its net debt was five times higher than a comparable measure of earnings, according to the latest group accounts. Delta is also in trouble, losing an estimated $50 million a day. Standard & Poor’s has downgraded its debt to junk.

‘Branded venture capital’ or vulture? 

Branson launched an array of high-profile businesses — from Virgin Atlantic and his space tourism venture, Virgin Galactic, by way of Virgin Money, Virgin Radio, Virgin Trains, Virgin Cola and Virgin Cosmetic. By 2014, the group had interests in 200 companies across 30 countries. The secret to his expansion lay in licensing the highly regarded Virgin name, a strategy he calls “branded venture capital.”

But all is not rosy in Branson land. Health care campaigner John Lister, for example, has accused Branson’s Virgin health care group of playing a “parasitic role in the National Health Service (NHS), fragmenting services and poaching NHS-trained staff and undermining nearby NHS trusts.”

Virgin Care had been awarded 2 billion pounds worth of NHS and local authority health care deals, but paid no corporate tax in the UK as it operated at a loss. The company is controlled by Virgin Group Holdings in the British Virgin Islands.

To make matters worse for Branson’s image, at the low point of the stock market rout in March, the billionaire reportedly shifted his $1.1 billion stake in Virgin Galactic Holdings from the US state of Delaware to the British Virgin Islands. US regulatory filings show the transfer was made on March 16, that day the Dow Jones Industrial Average saw its worst one-day drop in history.

“The 2008-09 financial crisis should have taught us that lavishing public money on big businesses without any conditions attached would be a big mistake,” Luke Hildyard from the High Pay Centre told The Guardian newspaper. 

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