Virgin Atlantic founder Richard Branson kisses the ground as he touches down at Ben Gurion Airport in Tel Aviv, Israel. Virgin Atlantic is celebrated its new route to Tel Aviv with a special flight full of VIPs, journalists, corporate sales guests and frequent flyers.

MIAMI – Virgin Group founder Sir Richard Branson has placed his private island, Necker Island on offer as collateral against a potential bailout from the UK government.

It is understood this is a strategy to sway a decision from the British Department for Transport (DfT) for a £500m bailout to keep the airline viable to run in the wake of the Coronavirus pandemic.

At the moment, the British Government appear to be wanting to reject the bailout.

For Branson, this could be seen as a last-ditch effort to keep the Virgin brand in the skies following the beginnings of the insolvency processes of Virgin Australia.

Virgin Australia announced this week that administration firm Deloitte would be in charge of the proceedings, following debts of up to £2.55bn.

Branson addresses tax critics

Sir Richard had come out to the media due to criticism that he had used the island as a way of avoiding taxes as well as going on the offensive about easyJet acquiring grants from the government.

Branson said, “There have been comments about my home. Joan and I did not leave Britain for tax reasons but for our love of the beautiful British Virgin Islands and in particular Necker Island … As with other Virgin assets, our team will raise as much money against the island as possible to save as many jobs as possible around the Group.”

The Virgin Group founder went on to say, “We will do everything we can to keep the airline going – but we will need government support to achieve that in the face of the severe uncertainty surrounding travel today and not knowing how long the planes will be grounded for.”

“This would be in the form of a commercial loan – it wouldn’t be free money and the airline would pay it back (as easyJet will do for the £600m loan the government recently gave them),” added Branson.

Branson’s aim at easyJet’s approved bailout was over the speed of the UK government to hand it out, whilst the process for Virgin Atlantic has been slower than usual.

easyJet’s £600m loan will join the £407m extra it intends to borrow from commercial creditors to ensure liquidity, with its fleets expected to be grounded into May.

The founder also mentioned about the comments made about his net worth, stating that it “is calculated on the value of Virgin businesses around the world before this crisis, not sitting as cash in a bank account ready to withdraw.”

Sir Richard Branson has invested around $250m into the entire group, with only around $125,000 for the airline division, according to Simple Flying.

Could Virgin Atlantic also be on the brink?

With a significant wing of the Virgin airline business already under, it does beg the question of Atlantic’s viability in this climate.

If a large carrier like easyJet required a bailout to survive this unprecedented period, then for Virgin Atlantic alike, this would most definitely be the case.

It ultimately depends on how much debt the carrier is also carrying.

According to its 2018 annual financial data, the airline made a loss of £60m with total equity as a result of a negative £20.1m.

For a normal operating practice, this airline can still run and function relatively well. Without liabilities taken into account, assets are recorded at £288.6m.

The 2019 annual reports have not been released as of yet as well as any first-quarter 2020 projections or findings, so it is difficult to see at this time how negative the results are.

Overall, Branson may actually appear to be in a dangerous situation. Even with the heavy amount of wealth in the group, we could begin to see a scenario where this brand may actually begin to downsize in the wake of a violent, global pandemic.