Richard Branson Tries to Mortgage Private Necker Island to Save Airlines Amid Coronavirus Collapse
It may be just a drop in the ocean but Sir Richard Branson is hoping his private island can save his airline empire, as it heads towards collapse amid the ongoing coronavirus pandemic.
On Tuesday, it was made public that his company Virgin Australia would seek bankruptcy protection, as the spread of the virus and subsequent travel restrictions have all but halted airline travel, gutting the business. The move is intended to ensure the company “emerges in a stronger financial position on the other side of the COVID-19 crisis.”
Still, Branson is going to great lengths personally to make sure that happens.
In an open letter to Virgin employees, the 69-year billionaire and group founder has offered to put up his Caribbean home, the private Necker Island, as partial collateral against a $600 million loan he is seeking from Britain’s government.
Branson purchased Necker, located near the British Virgin Islands and then uninhabited, for $180,000 in 1978 when he was 29 years old. Now estimated to be worth $80 million, Necker operates as an exclusive high-end resort with a low environmental impact, attracting a celebrity clientele and those seeking ultimate exclusivity as well as Branson’s home.
Notable guests from Princess Diana to Nelson Mandela have enjoyed the island’s relaxed lifestyle. Barack Obama famously spent a post-presidential vacation kitesurfing alongside Branson. When the property was featured on an episode of MTV’s Cribs, Mariah Carey made a memorable cameo lounging in a cabana. Jimmy Fallon and Nick Lachey have been married on its beaches, while a number of incidents have slipped into the news despite its extreme privacy.
In 2011, for example, while vacationing on Necker, Kate Winslet rushed into a house that had caught fire, rescuing Branson’s mother. Similarly, in 2017, rather than evacuate amid warnings of extreme weather, Branson chose to ride out Hurricane Irma in the main lodge’s wine cellar, as a makeshift bunker. The island was devastated.
Afterwards, Branson used the island (now rebuilt and reopened) to raise awareness and funds for those hit hardest by the hurricane.
The 74-acre island is available to book, with pricing from $3,500 to $8,000 per night with a minimum three-night stay. Included in that price are food and beverage, a full staff, access to infinity pools and tennis courts, equipment for windsurfing, kite-surfing, water-skiing and more, and a “disco dj” for one night.
Now, to prevent further job losses at Virgin, Branson proposes the island could be mortgaged and along with other Virgin assets used to collateralize a commercial loan package which would be repaid.
The extraordinary offer comes just hours after Branson failed to obtain an $888 million bailout package from Australia’s government, making Virgin Australia the first major airline to fall into administration as a result of the pandemic.
Branson has been criticized in recent days for not volunteering more of his fortune, estimated to be nearly $5 billion, to protect his airlines and prevent job loss.
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Addressing this scrutiny in his letter, Branson explains his wealth did consist of “cash in a bank account ready to withdraw” and that “over the years significant profits have never been taken out of the Virgin Group, instead they have been reinvested in building businesses that create value and opportunities.”
He added, “The challenge right now is that there is no money coming in and lots going out.”
Refuting charges that he is a tax exile (he moved permanently to the tax-free British Virgin Islands 14 years ago) undeserving of Britain’s help, Branson explained he and his wife Joan “did not leave Britain for tax reasons but for our love of the beautiful BVI and in particular Necker Island.”
“Over time, we built our family home here. The rest of the island is run as a business, which employs 175 people.” Proposing Necker as loan security, Branson places it among “other Virgin assets,” saying, “our team will raise as much money against the island as possible to save as many jobs as possible around the group.”
The open letter follows an earlier tweet from Branson’s personal account, laying out the facts about Virgin’s Businesses, which highlights the group’s previous efforts amid the pandemic.
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