Trouble at t'(Virgin) Mill??

[The Guvnor]

From today's Sunday Times:

<font face="Verdana, Arial, Helvetica" size="2">Branson mortgages his Virgin airline stake to raise cash

Kirstie Hamilton


SIR Richard Branson has mortgaged his entire stake in his
airline, Virgin Atlantic, to raise cash to fund his other business
activities.

The entrepreneur, who saw his fortune fall by £1.25 billion in
this year's Sunday Times Rich List, dismissed any suggestion
that the loan meant his empire was in trouble.

He said that he regularly put his airline business up as
collateral to fund his other businesses, many of which produce
big losses in their early stages.

Last year he sold a 49% stake in the airline to Singapore
Airlines for £550m, providing a welcome injection of cash into
the Branson empire.

Branson says the loan will be used used to pay for a series of
investments, including £10m for setting up Virgin USA, a
mobile phone venture, £27m for buying a chain of 80 health
clubs in South Africa, now renamed Virgin Active, £10m for
setting up Virgin Blue, an airline in Australia, and £10m for
Virgin Mobile in Australia, a joint venture with Optus, the mobile
phone company.

Neither Branson nor the bank, Lloyds TSB, would say how
much the loan was for, but since last year's sale Virgin
Atlantic's value is thought to have fallen as the airline industry
has been hit by high fuel costs and falling demand.

Lloyds TSB filed a charge against Virgin Atlantic Ltd, the
company that owns his airline stake, at Companies House last
month. If Branson was unable to pay the loan, Lloyds would
inherit the airline shareholding.

Many of Branson's biggest initiatives are made with cash-rich
partners, but City watchers remain puzzled at how his
extensive business interests fit together and where the money
comes from for his many loss-making businesses.

A Branson spokesman said this weekend that Virgin Trains
was back in profit after receiving compensation from Railtrack,
but all the train operators have had an extremely difficult year.

Nor has Virgin Mobile proved the money-spinner Branson might
have hoped. He linked up with One2One, one of the biggest
mobile operators, 18 months ago, predicting 1m users within a
year, but the phenomenal growth of the sector has since
slowed.

In the United States his mobile ambitions will eventually cost
close to $1 billion (£724m). Branson has just signed an alliance
with Sprint, one of the biggest telecoms groups, to attack the
American mobile phone market.</font>

[BEagle]

Guv - you seem to be trawling the Sunday Thunderer to find any aviation related articles this morning! Sir R B is merely using his business brain and financial nous to fund the investment plans he has for a tie-up with Sprint in the US. Because of the ludicrous price of 3G cellphone licences in the UK, he seems to have spotted a way of getting into 3G on the US CDMA system. Europe has 2 1/2G GPRS already working on GSM, but the US has a more fractional 'tower of Babel' sytem of varying phone standards which are incompatible with eachother and even with the US GSM1900 system. So it loks as though he's merely using the chance to get a firm foothold in 3G for far less than it would cost him in the UK.
Personally I can't see much attraction in 3G; however, tri-band GPRS will be very useful to many aircrew. Phones like the Motorola Timeport triband models are already standard kit for many aircrew; the GPRS version at £199 from BT will be even more so. But music and video on a little cellphone display........why bother?

Hardly a reason to suspect trouble at 't mill!! Or Mill House, Kidlington!

[crewrest]

Blimey, two messages in and I've had a lesson in airline finance and a guide to the world's cellphone networks.

I see there is a funky Virgin Atlantic Pilot recruitment banner spinning away above this post too.

[Devils Advocate]

Uhm, possibly Bob Maxwell incarnate ?

[Fill the Greek]

Makes me proud to be British

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She still makes me do the dishes

[capt waffoo]

He's sure gonna need that cash. The forthcoming collapse of his other airline is going to cost a whole shedload of money so perhaps he just wants to be ready?

[The Resistance]

.....Guvnor, unlike you, and the wild claims of 'self-promotion' you are frequently guilty of......Branson actually runs a REAL airline. Walter Mitty would have had NOTHING on you mate!

[spikyt]

BEAGLE- we do the timeport 260 (GPRS) for only 99.00 at vodafone and the timeport 250 for 29.99 both triband! just wanted to let u know so that u don't get raped over the price by cellnet!

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BA wannabe!

[BEagle]

Off the thread a bit, but why no GPRS from Virgin yet?
And SpikyT, OK then, what is the Vodafone best price for a Timeport 260 for an existing Cellnet customer of 10 years standing who has 3 months to go on an existing contract having had to upgrade independently last year because Vodafone-Connect couldn't be ar$ed to find him a tri-band phone when asked?

The success or otherwise of VirginBlue will be watched with great interest - as will the roll-out of A380 services by Virgin Atlantic!! But what would be really great would be to see a Boeing Sonicruiser with Virgin logos!!

[This message has been edited by BEagle (edited 10 June 2001).]

[Penn Doff]

VS already in with a chance of that one BEagle, fancy a bit of that when your VC10 days are over mate?

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"please report further"

[BEagle]

Well that would be very nice - I might have some years still to serve as a VC10 training captain, but Sir Richard's airline would never employ someone as old as I am now, let alone when they begin to operate the Sonicruiser.

[scroggs]

Actually, BEagle, VS recruits pilots up to 57 years old at entry. Even you would have a chance.... :)

[Evanelpus]

Guv

It's all gone very quiet on your 'virtual' airline front. Any news to report??

[newswatcher]

The value of the loan mentioned in the ST article is believed to be about £50m. Some collateral!

[crewrest]

Surely £50mil is a small amount compared to how much his chunk of the company is worth even the devalued amount quoted in yesterdays papers.

The papers also said that the airline would fine if the bank decided to call in it's debt as 'it is a profitable operation and would be popular amongst buyers'

Lloyds have owned two past LGW airlines before though. Neither of whome are around any more.

I think the articles call in to doubt the Virgin group's business practices as a whole rather than just the fairly successful airline.

I hope he manages this situation prudently.

[BUSBOI]

BEagle Yes Virgin Blue is interesting and people are watching.Surely the figure of 10 mil is not correct because even in pounds Brit it is peanuts against the amounts being lost downunder by all players.Maybe that amount is to pay a bit of stamp duty or petty cash but operaters here will be talking billions in start up and setup costs now.Worries me a little because being in the tourist business myself and one that relies to some extent on travel across the countryI know that the Aussie public does not realise the distance and cost involved in air travel here.Virgin Blue was in my opinion a brave call at face value though perhaps made with a projection of lower fuel costs than those prevailing and perhaps a hope that cheaper staff and such may help the bottom line.Big problems downunder methinks.

[Copenhagen]

Don't forget about Virgin Express - Loosing its shirt in Europe

And we hear even more bulls**t about their plans for the new Boeing Subsonic aircraft, and low cost in Canada and Kiwi land!

Again, Bransons ambitions are being curtailed by poor planning, and huge losses in everything he touches! Midass (sic) touch indeed!

Virgin Cars - Loss Making
Virgin Mobile Loss Making
Virgin Blue -Loss Making
Virgin Express Loss Making
Virgin Mobile - Loss Making
Virgin Atlantic - Profitable
Virgin Cinemas - Sold Loss Making
Virgin Music - Sold profitable
Virgin Clothing - Loss Making
Virgin Radio - Sold Loss Making
Virgin X country Loss Making
Virgin Trains - Was profitable - killing the brand however.
Virgin Direct -Loss Making
Virgin Energy -Loss Making
Virgin Wines ?

[Magplug]

How long will it be before the VS empire implodes ? The only winner will be SA who inherit the slots at LHR - After all that was all they wanted in the first place.

[M.Mouse]

Try reading Mr. Branson's autobiography and you will see a pattern.

The Virgin Music business sale was forced by the banks I believe. If I recall he was planning a takeover of EMI but the opposite happened.

When all is said and done though he has made a lot more money than I will ever make!

[sweeper]

GUV
are you stimulating comment,or merely becoming whingey???

[Capt Byrd de Styrke]

Now we have all seen the trouble the swiss version of Virgin got themselves into !

[Doodles]

Does it not stand to reason that you would only sell 49% of your flagship company (the one that the record company was sold for to keep going) and then raise a mortgage against the balance of your ownership, if you were in need of some large amounts of cash?
True that the 49% was sold for a huge profit on the original investment but take into account the monies that have been poured in since the start (cross subsidies from other Virgin companies?) - somewhere there must be a recent cash drain (or should that be cash train?)

[Cyrano]

M. Mouse:

As a counterweight to the autobiography you might like to read the UNauthorised biography, "Branson" by Tom Bower. I found it very illuminating. Reading it, you'll see a pattern too - just not such a positive one!

Cyrano

[Copenhagen]

Which begs the question to be asked...

What happened to all the original Singapore Air money?

Seems that VS is not wanted in Star either... BD have just cancelled code share agreements on Domestics...

[Zeitgebers]

I don't know - Mr Wentworth told me to come and say there was 'trouble at mill' - I didn't expect the Spanish Inquisition!

[swashplate]

Dammit, cyrano, you beat me to it.....


Must second you on that though, doesn't seem to be the kind of buisiness you'd want to invest hard-earned £ in. Also, not the kind of guy to go into partnership with either....

'..while the entry was painful, the exit was certainly torture.....'

Tom Bower "Branson"

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Live long and Prosper.....

[islandhopper]

Hi Copenhagen ref the codeshare being dropped just heard from a man in the know that BMI are hoping to launch flts to HKG next year thats one reason they dropped the agreement.

[dallas dude]

Guv

I've run out of the six inch nails I was driving through my feet and as I can't find my classic "It's a knockout" videos I'll waste time asking a favour of you....

....If you could spare Sir Dick 5 minutes of your time perhaps you could show him where he's gone wrong.

Of course, that would be 2.5 mins to boil the kettle, 1 minute to steep, add the milk and sugar and with the 20 seconds you have left tell him all you know about running an airline. If you've any time left over offer him a digestive, please.

However, if you're busy doing something productive, don't trouble yourself.

Ta very much.

dd

sorry Danny, couldn't resist it.

[BEagle]

Power of PPRuNe!! SpikyT, thanks for your e-mails. I have now discovered that Cellnet GPRS is currently a crock of $hit and will not provide me with what I'd expected.

Advertising guff for new technology which isn't really sound? Well, looks like Sir Dicky needs to be very careful mortgaging his airline holdings to jump on the Sprint PCS bandwagon. Good luck though!!