Galwayman wrote:

Spot on . It’s unworthy of any investment . Even Branson won’t put any of his own money into it . And that says it all really ...

Once again you are talking rubbish. Did you miss this last month where SRB injected money into VS as well as other businesses within the Virgin empire?

https://www.ft.com/content/4010625e-6c5 ... bea055720b

I'm not going to go round in circles about whether SRB should be fully funding this, but some people do make out he has a bottomless pit of cash.

skipness1E wrote:

Context, context, context.
Virgin’s major problem was not having a partner as SRB saw the rise of alliances as a cartel. He was eventually talked round and the business was well back on track partnering with Delta. That alone means a corner had been turned and the future was brighter. And then along came the Dreamliner engine fiasco and then Coronavirus.

Nice to see a more balanced post on this thread for a change.

I agree that VS were slow to embrace the concept of entering a joint venture with another airline (though they've been doing codeshare deals with airlines for years) and they should have probably joined an alliance sooner (SkyTeam would be the obvious one right now, and maybe that would have happened more quickly had SRB's sale of part of his stake to Air France-KLM went ahead). Another issue to add to the RR 787 engine fiasco and COVID-19 is Brexit. The weak GBP rate since the 2016 vote was cast in favour of leave would have no doubt impacted many businesses who have costs in USD, particularly VS given how much of their business involves traffic to/from the US. I can only think of one time around Jan/Feb 2018 when
GBP was anywhere close to what it was against USD pre-vote.

3AWM wrote:

Virgin already have a subsidiary with a 2nd AOC so getting the AOC cancelled is not an obstacle to that.

That will be Virgin Atlantic International Limited that currently operates a number of LGW-Caribbean routes.

3AWM wrote:

If UK gov lent Virgin £500m how would that have been spent? Paying leases on aircraft that are sitting on the ground for 6 months. I wouldn't make sense. Aircraft lessors are the end of the line.

It's probably one reason why Sir Stelios was dead against the easyJet board accessing the scheme and demanding the orders with Airbus are cancelled. OK I know easyJet probably have a different owned/leased aircraft mix to VS and it's easier said than done to get out of an order that big, but either way they will be spending money on new aircraft they currently can't fly, the rationale for buying new (fuel efficiency) isn't as strong with oil prices being this low, and raises questions about the necessity of getting new aircraft right now. Despite his bluster and going to war with the board, he has a point.

I won't go into Sir Stelios' dividend again, though I will highlight the fact he appears to be getting an easier ride both in the media and on this forum than SRB despite being similar in the sense he's not a UK resident and not involved in the day-to-day running of the airline he founded.

VS11 wrote:

Virgin Atlantic is a worthy investment for investors who can afford a longer investment horizon.

In your opinion. The market, and HM Government, clearly think otherwise.

VS11 wrote:

...it is a decade-long economic depression. Looks like many people still have not grasped the enormity of the situation.

Without wishing to troll you, one could accuse those advocating for a Government bailout/loan/whatever-you-want-to-call-it for VS, of the same thing.

VS is toast. It has no assets. It has produced no profit over the past 10 years (I mean in total - there have been small profits some years, but these are countered and wiped out by huge losses). Yes, nobody could have foreseen the pandemic. But, in the aftermath of this mess, in picking which companies to prop up and save, investors and HM Government are going to pick ones that are far less risky with fewer liabilities.

Didn't someone post further up that VS owes DL £($?)200 million? I mean, come on!

Someone else further up posted about VS, in its current DL/Virgin Group ownership form, does not need to be profitable, since it pays fees to its owners. I thought that was an insightful post.

Junglejames wrote:

JannEejit wrote:

Armodeen wrote:

This opinion is popular but a little grating.

Yes but unfortunately in terms of UK taxpaying public, this is the perception that most will adhere too, come the final reckoning. I think SRB (the public face of Virgin) has created negative headlines in the UK in recent times, especially around his percieved personal wealth, his attempts to sue the NHS and walking away from a new Virgin Trains operator contract because of his unwillingness to underpin the staff pensions scheme associated with the West Coast line franchise renewal.

It may be about to become the world's most expensive case of 'the boy who cried wolf' ?

Please, just a quick request.
If you don't know what happened with the West Coast Mainline franchise renewal, then please don't go spouting pure rumours or guestimates.

The operating company that put in a bid to operate the next franchise (owned partly by Virgin, Stagecoach and SNCF) put in its own fair bid. It differed slightly from the DfT requirements, in that it did not fully cover the expected pension shortfall.
The DfT had requested companies to bid based on propping up past and future pension shortfalls to an unknown amount. This is quite clearly not feasible. Why would you prop up old and future shortfalls (which you had nothing to do with) to an unspecified amount? (government would have plucked a figure out of thin air at later date).

At the same time, the DfTs requirements were at the time being reviewed, and nothing was set in stone. It is quite possible the government may still have to prop the pension pot up.

So with these Things completely up in the air, and with how unfeasible a request it was, the new prospective operating company put in a bid that differed slightly. They informed the DfT beforehand that the bid would differ, and nothing was said. They were made to believe all would be fine (It later turned out the DfT kept quiet for a reason- they didn't want the other bidders to know it was essentially a 2 horse race, and so they allowed the prospective operator to keep spending millions of pounds on the bid).

It was not until late in the day, that the DfT turned round and said the bid was non compliant, and that Stagecoach (They were the ones dead against propping up the pension pot, not Virgin) were chucked out of another 2 bids for other franchises.

It has to be remembered, that the Virgin Trains that refused to prop up the pension pot was partly owned by 3 companies, and they were in effect, a different company to the one already operating the West Coast franchise, and they were bidding for a different operation (The new operation includes preparing for HS2).

Thank you for your information. I already said I wasn't dealing in facts but 'public perception'. My post (quoted) was written within the context of how Branson is currently perceived in the eyes of the UK public, in particular reference to gaining any kind of sympathy towards the notion of a taxpayer bailout for Virgin Atlantic. If you'd read my further posts you'd have seen this. I think further developments in this particular case have proven that theory.

The ins and outs of the WCML franchise arrangements are undoubtedly of little or no interest to the vast majority of 'Joe Public' who edify themselves and therefore form opinions about these types of affairs via tabloid newspaper culture and social media tittle tattle. That was my point here.

Dmoney wrote:

VS11 wrote:

Virgin Atlantic is a worthy investment for investors who can afford a longer investment horizon. It is probably a good thing that investment banks are involved as advisors and that sovereign wealth funds are considered. I find it somewhat surprising that the Bank of England hasn't followed yet the US Federal Reserve in buying high-yield corporate bonds. At the end of they day, the enemy here is not Richard Branson, it is a decade-long economic depression. Looks like many people still have not grasped the enormity of the situation.

You haven't grasped you are asking for a bailout for rich tax dodgers paid for by dirt poor British people. VS is not a viable airline at the best of times. They've made a big loss over the last 5 years.

I work in corporate finance. Equity has to stump up here. They take the pain here.

Anyway reality will smack you in the face at some point. Nobody is giving VS a dime because they don't want to appear before a select committee explaining why they gave cash to a firm when every reasonable projection showed it wasn't coming back!

It is Virgin that need the money. They are not tax dodgers. Therefore, you are incorrect. There is no bailout for rich tax dodgers.

If you were so concerned, there could be rules attached to any loans. Say, no dividends to shareholders for x number of years. That way Richard Branson or Delta cannot be seen to gain from any loan.

Honestly though, your viciousness stinks.
Rich tax dodger.
Many years ago he took a gamble, and ended up buying a lovely island which he couldn't really afford. Then came the caveat that the new owner had to do the island up, or they would lose it. More money he couldn't afford.

Many gambles, risks and hard work later, he is in the fortunate position where he doesn't need to worry about money. A situation all of us wish we were in.
As he reached retirement, him and his family decided- 'Heck, it's about time we really enjoyed this bit of paradise we have, let's move there permanently'. Guess what, we would all do the same.

Throughout his working life, he lived in the UK paying tax. His companies pay tax.

Now I disagree with some of the things he has done, but Crikey, the jealousy on here stinks.

Sent from my SM-G930F using Tapatalk

JannEejit wrote:

Junglejames wrote:

JannEejit wrote:

Yes but unfortunately in terms of UK taxpaying public, this is the perception that most will adhere too, come the final reckoning. I think SRB (the public face of Virgin) has created negative headlines in the UK in recent times, especially around his percieved personal wealth, his attempts to sue the NHS and walking away from a new Virgin Trains operator contract because of his unwillingness to underpin the staff pensions scheme associated with the West Coast line franchise renewal.

It may be about to become the world's most expensive case of 'the boy who cried wolf' ?

Please, just a quick request.
If you don't know what happened with the West Coast Mainline franchise renewal, then please don't go spouting pure rumours or guestimates.

The operating company that put in a bid to operate the next franchise (owned partly by Virgin, Stagecoach and SNCF) put in its own fair bid. It differed slightly from the DfT requirements, in that it did not fully cover the expected pension shortfall.
The DfT had requested companies to bid based on propping up past and future pension shortfalls to an unknown amount. This is quite clearly not feasible. Why would you prop up old and future shortfalls (which you had nothing to do with) to an unspecified amount? (government would have plucked a figure out of thin air at later date).

At the same time, the DfTs requirements were at the time being reviewed, and nothing was set in stone. It is quite possible the government may still have to prop the pension pot up.

So with these Things completely up in the air, and with how unfeasible a request it was, the new prospective operating company put in a bid that differed slightly. They informed the DfT beforehand that the bid would differ, and nothing was said. They were made to believe all would be fine (It later turned out the DfT kept quiet for a reason- they didn't want the other bidders to know it was essentially a 2 horse race, and so they allowed the prospective operator to keep spending millions of pounds on the bid).

It was not until late in the day, that the DfT turned round and said the bid was non compliant, and that Stagecoach (They were the ones dead against propping up the pension pot, not Virgin) were chucked out of another 2 bids for other franchises.

It has to be remembered, that the Virgin Trains that refused to prop up the pension pot was partly owned by 3 companies, and they were in effect, a different company to the one already operating the West Coast franchise, and they were bidding for a different operation (The new operation includes preparing for HS2).

Thank you for your information. I already said I wasn't dealing in facts but 'public perception'. My post (quoted) was written within the context of how Branson is currently perceived in the eyes of the UK public, in particular reference to gaining any kind of sympathy towards the notion of a taxpayer bailout for Virgin Atlantic. If you'd read my further posts you'd have seen this. I think further developments in this particular case have proven that theory.

The ins and outs of the WCML franchise arrangements are undoubtedly of little or no interest to the vast majority of 'Joe Public' who edify themselves and therefore form opinions about these types of affairs via tabloid newspaper culture and social media tittle tattle. That was my point here.

You said he had created a negative public perception, but then said that one of the ways he had done so was by walking away from a contract etc etc. So you clearly said and believed that he walked away.
Ok, let's say it was badly written. Either way, you weren't the first person to mention the West Coast franchise, so lets use this as some teaching blocks.

Anyway, a couple of points:
1. The Virgin brand is looked on quite favourably in the UK. You only have to look at the outcry when Virgin Trains nearly lost the West Coast franchise a few years back.

2. You should never bow down to public pressure and public perception unless they are basing their beliefs on facts. Especially considering the members of the public that shout the loudest, are often the least intelligent in society, and usually should not be listened to.

3. The negative perception of Sir Richard Branson actually comes from the civil service (And hence government) itself. The civil service and the conservatives do not like Richard Branson. Partly because of stupid perceptions that have no real basis, and partly because Virgin Trains have found the government wanting on a previous occasion. Civil Servants are often idiots, and Virgin Trains found them out a few years back. This ended up costing the government many millions in compensation.

Lastly, Richard Branson is dead against leaving the EU, and is not a Tory. I know this should not make a difference. But let's put it in a way that a lot of others Will understand. Our current government is so similar to the Trump government, it is scary.

So if Virgin don't receive any government backed loans, my point 3 will have a lot to do with it. There is a well known saying in the DfT- "Anyone but Branson"- Yes, that is really how our DfT acts.

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Galwayman wrote:

Dmoney wrote:

VS11 wrote:

Virgin Atlantic is a worthy investment for investors who can afford a longer investment horizon. It is probably a good thing that investment banks are involved as advisors and that sovereign wealth funds are considered. I find it somewhat surprising that the Bank of England hasn't followed yet the US Federal Reserve in buying high-yield corporate bonds. At the end of they day, the enemy here is not Richard Branson, it is a decade-long economic depression. Looks like many people still have not grasped the enormity of the situation.

You haven't grasped you are asking for a bailout for rich tax dodgers paid for by dirt poor British people. VS is not a viable airline at the best of times. They've made a big loss over the last 5 years.

I work in corporate finance. Equity has to stump up here. They take the pain here.

Anyway reality will smack you in the face at some point. Nobody is giving VS a dime because they don't want to appear before a select committee explaining why they gave cash to a firm when every reasonable projection showed it wasn't coming back!

Spot on . It’s unworthy of any investment . Even Branson won’t put any of his own money into it . And that says it all really ...

I think Branson would put his own money in at the 11th hour, he’s too nostalgic about Virgin.

jetwet1 wrote:

Does anyone know if VS pays the Virgin Group a fee like every other non wholly owned Virgin company ?

A detailed report in the Business section of The Times on 22nd April states that Virgin Atlantic pays an "undisclosed" royalty to Virgin Enterprises.

IT does not matter what anyone thinks of SRB, at the end of the day VS is asking for commercial loans, whether from banks, the UK Government or who ever and at this moment none of them sees VS as a worthwhile risk, sad how ever it is.

Junglejames wrote:

1. The Virgin brand is looked on quite favourably in the UK. You only have to look at the outcry when Virgin Trains nearly lost the West Coast franchise a few years back.

True. You don't see massive campaigns to boycott other Virgin companies such as Active, Atlantic, Money, Media, Radio, Wines, etc. Nor do you see calls for Virgin Money to be stripped as title sponsors for the London Marathon or people boycotting the event.

BealineV953 wrote:

jetwet1 wrote:

Does anyone know if VS pays the Virgin Group a fee like every other non wholly owned Virgin company ?

A detailed report in the Business section of The Times on 22nd April states that Virgin Atlantic pays an "undisclosed" royalty to Virgin Enterprises.

From what I have been able to dig up in the last couple of hours, VS pays about 0.6% of the GROSS revenue it earns to the Virgin Group, so roughly 170m pounds off the top of it's earnings last year went to the Virgin Group. You do the math for each year and it is very easy to see why VS has had a hard time being profitable. Add say 100m pounds (a very rough earnings - taxes etc) to each of the last 10 years and you get a whole different picture of their finances.

jetwet1 wrote:

BealineV953 wrote:

jetwet1 wrote:

Does anyone know if VS pays the Virgin Group a fee like every other non wholly owned Virgin company ?

A detailed report in the Business section of The Times on 22nd April states that Virgin Atlantic pays an "undisclosed" royalty to Virgin Enterprises.

From what I have been able to dig up in the last couple of hours, VS pays about 0.6% of the GROSS revenue it earns to the Virgin Group, so roughly 170m pounds off the top of it's earnings last year went to the Virgin Group. You do the math for each year and it is very easy to see why VS has had a hard time being profitable. Add say 100m pounds (a very rough earnings - taxes etc) to each of the last 10 years and you get a whole different picture of their finances.

Precisely - this is the viability picture the asserted “corporate finance” professionals either cannot or refuse to see. Either way it drives a coach and horses through their position (which is plainly wrong) and undermines their asserted credentials.

This is a viable business that provides significant value to UK plc, it needs to chart a path through the next 6 - 12 months (which is not guaranteed but is through no fault of the business or anyone connected to it) in order to realise it’s potential in the years to come.

jetwet1 wrote:

BealineV953 wrote:

jetwet1 wrote:

Does anyone know if VS pays the Virgin Group a fee like every other non wholly owned Virgin company ?

A detailed report in the Business section of The Times on 22nd April states that Virgin Atlantic pays an "undisclosed" royalty to Virgin Enterprises.

From what I have been able to dig up in the last couple of hours, VS pays about 0.6% of the GROSS revenue it earns to the Virgin Group, so roughly 170m pounds off the top of it's earnings last year went to the Virgin Group. You do the math for each year and it is very easy to see why VS has had a hard time being profitable. Add say 100m pounds (a very rough earnings - taxes etc) to each of the last 10 years and you get a whole different picture of their finances.

Royalties are always paid on gross revenue. And rate of 0.6% is very very low, with typical rates starting at 3%.

Factors Affecting Royalty Rates in Brand Licensing, Part One
https://www.flowhaven.com/resources/fac ... s-part-one

What if EK or EY takes over. Go head to head with BA and will give the Americans a run for their money on the Transatlantic routes.

BealineV953 wrote:

jetwet1 wrote:

Does anyone know if VS pays the Virgin Group a fee like every other non wholly owned Virgin company ?

A detailed report in the Business section of The Times on 22nd April states that Virgin Atlantic pays an "undisclosed" royalty to Virgin Enterprises.

So much for not taking any profit out of VS. Technically the truth but trying to pull the wool over our eyes.

blooc350 wrote:

What if EK or EY takes over. Go head to head with BA and will give the Americans a run for their money on the Transatlantic routes.

Etuhahad losing money.

Emirates trying to save money.

They won't be silly to buy even a penny of virgns.

VS11 wrote:

jetwet1 wrote:

BealineV953 wrote:

A detailed report in the Business section of The Times on 22nd April states that Virgin Atlantic pays an "undisclosed" royalty to Virgin Enterprises.

From what I have been able to dig up in the last couple of hours, VS pays about 0.6% of the GROSS revenue it earns to the Virgin Group, so roughly 170m pounds off the top of it's earnings last year went to the Virgin Group. You do the math for each year and it is very easy to see why VS has had a hard time being profitable. Add say 100m pounds (a very rough earnings - taxes etc) to each of the last 10 years and you get a whole different picture of their finances.

Royalties are always paid on gross revenue. And rate of 0.6% is very very low, with typical rates starting at 3%.

Factors Affecting Royalty Rates in Brand Licensing, Part One
https://www.flowhaven.com/resources/fac ... s-part-one

Some Virgin spokesman came out last week saying that SRB has not been paid by VS for years. Now we are learning the group he ownes has made £170million from them in 2019? £170 million in a single year from a company that is loss making? How much more spin so we need to uncover before you stop blindly defending this set up? And your line of defence is that 0.6% is low for royalties? It seems a lot of money when it's the difference between loss (no due in the UK) and profit (taxes on profits to be paid in the UK). And guess where the £170 million went? A tax haven... do me a favour. If this is really true, that would make fools out of all of us. Poor SBR, hasn't seen a penny from VS doesn't have enough cash to put into VS...just taken the lot and more

Can someone confirm if the 0.6% = £170 million in 2019 is true?

Westerwaelder wrote:

Can someone confirm if the 0.6% = £170 million in 2019 is true?

Maybe this is where you should have started. Just because there is a royalty agreement in place does not mean the Virgin Group is receiving the royalties.

You’re a zealot not a Fabian. I am not asking you to bail out rich people I am suggesting we don’t make normal people destitute. These are not normal days for anyone and every unpaid mortgage has a family and kids as collateral damage. This is not a textbook example, a pub discussion or a willy waving competition. A classic example of a believer in something that you can’t see all the wood for the trees.
And don’t call me lad, it’s not the 1950s and you’re not my grandad!

FrenchPotatoEye wrote:

blooc350 wrote:

What if EK or EY takes over. Go head to head with BA and will give the Americans a run for their money on the Transatlantic routes.

Etuhahad losing money.

Emirates trying to save money.

They won't be silly to buy even a penny of virgns.

Its "Etihad" lol

And you never know.............all that oil money

blooc350 wrote:

What if EK or EY takes over. Go head to head with BA and will give the Americans a run for their money on the Transatlantic routes.

That would be fantastic but unlikely to happen unfortunately .

The most important airlines to the UK economy (yes economy, not ego) are probably 1) BA , 2) Ryanair, 3) Easyjet 4) Emirates .... VS are irrelevant really, they only fly a handful of routes from a small number of airlines, do nothing exceptional for connectivity , make little if any profit ..

This thing where Branson skims his money on gross revenues is probably why he's been happy to run it as a basket case for so many years - Uk civil servants obviously sussed him out years ago

DobboDobbo wrote:

jetwet1 wrote:

BealineV953 wrote:

A detailed report in the Business section of The Times on 22nd April states that Virgin Atlantic pays an "undisclosed" royalty to Virgin Enterprises.

From what I have been able to dig up in the last couple of hours, VS pays about 0.6% of the GROSS revenue it earns to the Virgin Group, so roughly 170m pounds off the top of it's earnings last year went to the Virgin Group. You do the math for each year and it is very easy to see why VS has had a hard time being profitable. Add say 100m pounds (a very rough earnings - taxes etc) to each of the last 10 years and you get a whole different picture of their finances.

Precisely - this is the viability picture the asserted “corporate finance” professionals either cannot or refuse to see. Either way it drives a coach and horses through their position (which is plainly wrong) and undermines their asserted credentials.

This is a viable business that provides significant value to UK plc, it needs to chart a path through the next 6 - 12 months (which is not guaranteed but is through no fault of the business or anyone connected to it) in order to realise it’s potential in the years to come.

I'm sorry for knowing what I'm talking about but it's not a viable business. It's end of credit cycle stuff and no matter how you cut it, VS isn't solidly profitable. You'd want at least a through the cycle 8% Return on equity to assume the risk of running an airline. VS is nowhere near that. Everyone is going to earn 0-2% returns for the next three years so you need to be earning decent returns through the down cycle.

Why are you so desperate to suck up to rich people? Why is it socialism for the rich but Brits starving to death because their benefits have been cut.

I've no issue with Micheal O'Leary. You know where you stand with him, it's free markets in tooth and claw. Plus the lad pays his taxes. He's not a hypocrite like you lot. But don't pretend to be a free market man so you can reward yourself and then come begging for a bailout.

Stop defending a bailout for the rich, it's morally indefensible whatever your particular views.

VS11 wrote:

Westerwaelder wrote:

Can someone confirm if the 0.6% = £170 million in 2019 is true?

Maybe this is where you should have started. Just because there is a royalty agreement in place does not mean the Virgin Group is receiving the royalties.

That is why I asked. So much smoke, so many mirrors.... So are you saying they were never paid?

Dmoney wrote:

DobboDobbo wrote:

jetwet1 wrote:

From what I have been able to dig up in the last couple of hours, VS pays about 0.6% of the GROSS revenue it earns to the Virgin Group, so roughly 170m pounds off the top of it's earnings last year went to the Virgin Group. You do the math for each year and it is very easy to see why VS has had a hard time being profitable. Add say 100m pounds (a very rough earnings - taxes etc) to each of the last 10 years and you get a whole different picture of their finances.

Precisely - this is the viability picture the asserted “corporate finance” professionals either cannot or refuse to see. Either way it drives a coach and horses through their position (which is plainly wrong) and undermines their asserted credentials.

This is a viable business that provides significant value to UK plc, it needs to chart a path through the next 6 - 12 months (which is not guaranteed but is through no fault of the business or anyone connected to it) in order to realise it’s potential in the years to come.

I'm sorry for knowing what I'm talking about but it's not a viable business. It's end of credit cycle stuff and no matter how you cut it, VS isn't solidly profitable. You'd want at least a through the cycle 8% Return on equity to assume the risk of running an airline. VS is nowhere near that. Everyone is going to earn 0-2% returns for the next three years so you need to be earning decent returns through the down cycle.

Why are you so desperate to suck up to rich people? Why is it socialism for the rich but Brits starving to death because their benefits have been cut.

I've no issue with Micheal O'Leary. You know where you stand with him, it's free markets in tooth and claw. Plus the lad pays his taxes. He's not a hypocrite like you lot. But don't pretend to be a free market man so you can reward yourself and then come begging for a bailout.

Stop defending a bailout for the rich, it's morally indefensible whatever your particular views.

Based on your output on here, I don’t think you know what you are talking about and I don’t think you are what you claim to be.

Virgin Atlantic is up for sale
https://www.ch-aviation.com/portal/news ... ale-report

VS11 wrote:

Westerwaelder wrote:

Can someone confirm if the 0.6% = £170 million in 2019 is true?

Maybe this is where you should have started. Just because there is a royalty agreement in place does not mean the Virgin Group is receiving the royalties.

The piece in The Times said that the undisclosed royalty was paid to Virgin Enterprises, the 'licencing division' of the Virgin organisation.
The article says that for 2018 Virgin Enterprises reported revenues of £75m. That included £11m from Virgin Money, £10m from Virgin Media and undisclosed royalties from Virgin Active, Virgin Australia and Virgin Cruises. Virgin Enterprises made a pre-tax profit of £51m. It paid an £85m dividend to its sole shareholder, Virgin Group Holdings, headquartered in the BVI.
NB - the dividend of £85m is not a typo, the dividend was greater than the annual revenue.

blooc350 wrote:

What if EK or EY takes over. Go head to head with BA and will give the Americans a run for their money on the Transatlantic routes.

A non-UK or EU organisation can not own more than 49% of a UK airline. Air Service Agreements between the UK and other governments require that an airline nominated by the UK is majority UK owned.

jetwet1 wrote:

BealineV953 wrote:

jetwet1 wrote:

Does anyone know if VS pays the Virgin Group a fee like every other non wholly owned Virgin company ?

A detailed report in the Business section of The Times on 22nd April states that Virgin Atlantic pays an "undisclosed" royalty to Virgin Enterprises.

From what I have been able to dig up in the last couple of hours, VS pays about 0.6% of the GROSS revenue it earns to the Virgin Group, so roughly 170m pounds off the top of it's earnings last year went to the Virgin Group. You do the math for each year and it is very easy to see why VS has had a hard time being profitable. Add say 100m pounds (a very rough earnings - taxes etc) to each of the last 10 years and you get a whole different picture of their finances.

Thanks for looking into that. I assume by last year you mean 2018 given the 2019 report isn't yet out? Forgive my limited understanding of accounting, but is that £170m part of the figure taken off to arrive at the figure declared as a pre-tax profit/loss?

If that's correct about the royalties being that high and if that is removed before you get to the pre-tax profit/loss figure, it changes the narrative about VS being a loss-making outfit. If it is harming the VS bottom line, then there's a debate to be had about the necessity of those funds going to the Virgin Group moving forward, especially given SRB (via the Virgin Group) is the majority owner and founder.

blooc350 wrote:

What if EK or EY takes over. Go head to head with BA and will give the Americans a run for their money on the Transatlantic routes.

Considering Etihad's track record in investing in airlines, I wouldn't touch their offer with a barge pole, plus I think the days of Etihad investing in other airlines and trying to keep up with their rivals down the road in Dubai are over.

Galwayman wrote:

The most important airlines to the UK economy (yes economy, not ego) are probably 1) BA , 2) Ryanair, 3) Easyjet 4) Emirates

In your opinion at least. As somebody who has MAN as one of my two local airports, I would say VS are a lot more relevant there than BA. Not because I'm biased due to MAN being local and not because I don't want to see VS fail (unlike yourself and some others on here), I look at what they're offering from MAN compared to BA and others and see an airline that sees potential in the MAN market.

Emirates do what they do really well and open up a load of one-stop connection opportunities, especially from airports they serve outside of London that would otherwise have to contemplate two-stop options depending where they're going. They aren't much good though to anybody in the UK that isn't going eastbound.

xwb777 wrote:

Virgin Atlantic is up for sale
https://www.ch-aviation.com/portal/news ... ale-report

That's a rehash of what the Sunday Telegraph reported.

VS11 wrote:

tphuang wrote:

Even if what you say is true, try finding an investor in the current environment with that kind of cash, patience and risk tolerance.
Based on the people that "are interested", VS will be divided up by vultures.
There is not a single airline group that can invest in VS at the moment.

VS has not made money in 7 out of past 10 years when airline industry as a whole has been doing well. Who in their right mind it going to take on the debt and lose year for another 10 years? Terrible investment idea.

Currently, governments can and do support many other airlines, companies and consumers not because they are excellent investments but because they are trying to prevent the total collapse of the economy as we know it. The flow of money is the overaching objective here.

But if you and many others here want to focus on the past 10 years of VS and the TATL market, you have to start on macro level and acknowledge:
1. The completely structurally distorted market that LHR is with BA controlling access to the market
2. The truly anti-competitive nature of the TATL JV's
3. The fact that US and EU/UK legislation are not on par when it comes down to solvency and bankruptcy protection, which plays to the benefit of the US carriers competing internationally.

In fact, #3 is the most important factor here because without US Chapter 11 many of the present-day US carriers wouldn't be here today and the entire competitive landscape would be different. Also because of 3. VS has no recourse the way its US competitors have.

On a micro level, VS has been an exemplary business that constantly focuses on its people, service and innovation. The issue for many independent players in the past 30 years has been that due to unrestricted capital flows, companies have been growing through M&A instead of organically and the smaller players have been artificially squeezed out. This is true not just for aviation but it is more painful there as it is truly global in nature without the global level playing field.

Where you say "The truly anti-competitive nature of the TATL JV's" what exactly do you mean?
In every market from Europe to and from North America the three alliances compete hard for business. For just about every origin and destination, each of the alliances will fight hard for a share of the market, whether on a non-stop direct service, or via intermediate points. Think about a journey like BER-SFO and all of the available options (via AMS, FRA, LON, PAR and so on). I'd say the consumer has never had as many options.

Where you say Virgin "...has been an exemplary business that constantly focuses on its people, service and innovation" what are you thinking of when you say innovation? A couple of other posters have said this, and I genuinely struggle to think of anything. I'm asking about this because I think that if Virgin had been genuinely innovative it would be in better shape.

BealineV953 wrote:

Where you say "The truly anti-competitive nature of the TATL JV's" what exactly do you mean?
In every market from Europe to and from North America the three alliances compete hard for business. For just about every origin and destination, each of the alliances will fight hard for a share of the market, whether on a non-stop direct service, or via intermediate points. Think about a journey like BER-SFO and all of the available options (via AMS, FRA, LON, PAR and so on). I'd say the consumer has never had as many options.

Alliances and JV's are different. But you can take BOS-LHR. AA/BA and VS/DL are the only options. In terms of operating carriers, AA is not even operating it, it is just BA. So even during Bermuda II, there were 4 operating carriers, even UA flew BOS-LHR until 2002 or so, and now the choice is even less....you can expand to BOS-LON, and you get only one extra carrier - Norwegian. So that's what it means - consumers have fewer options and eventually pay higher prices.

Boeing74741R wrote:

Junglejames wrote:

1. The Virgin brand is looked on quite favourably in the UK. You only have to look at the outcry when Virgin Trains nearly lost the West Coast franchise a few years back.

True. You don't see massive campaigns to boycott other Virgin companies such as Active, Atlantic, Money, Media, Radio, Wines, etc. Nor do you see calls for Virgin Money to be stripped as title sponsors for the London Marathon or people boycotting the event.

I wouldn't worry about a few small attempts at a boycott. I hadn't even heard of them until now.

Which.
1. Are partly against companies not owned by the Virgin Group
2. Are partly organised by hard line Brexiteers.
3. Are partly outside the UK anyway. So not going to make much difference.

On the whole, the Virgin Group is looked upon quite favourably compared to most.


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DobboDobbo wrote:

Dmoney wrote:

DobboDobbo wrote:

Precisely - this is the viability picture the asserted “corporate finance” professionals either cannot or refuse to see. Either way it drives a coach and horses through their position (which is plainly wrong) and undermines their asserted credentials.

This is a viable business that provides significant value to UK plc, it needs to chart a path through the next 6 - 12 months (which is not guaranteed but is through no fault of the business or anyone connected to it) in order to realise it’s potential in the years to come.

I'm sorry for knowing what I'm talking about but it's not a viable business. It's end of credit cycle stuff and no matter how you cut it, VS isn't solidly profitable. You'd want at least a through the cycle 8% Return on equity to assume the risk of running an airline. VS is nowhere near that. Everyone is going to earn 0-2% returns for the next three years so you need to be earning decent returns through the down cycle.

Why are you so desperate to suck up to rich people? Why is it socialism for the rich but Brits starving to death because their benefits have been cut.

I've no issue with Micheal O'Leary. You know where you stand with him, it's free markets in tooth and claw. Plus the lad pays his taxes. He's not a hypocrite like you lot. But don't pretend to be a free market man so you can reward yourself and then come begging for a bailout.

Stop defending a bailout for the rich, it's morally indefensible whatever your particular views.

Based on your output on here, I don’t think you know what you are talking about and I don’t think you are what you claim to be.

That's not a response. Because you're somewhat aware you've no idea what you are talking about. Why should we bailout rich people when they won't put up money themselves.

Norwegian equity took an 95% Wipeout and then will inject another 40m. Debt holders, lessors and convertible note holders also take a bath in the debt equity swap. Only then is there a viable company to provide government support too. What you're asking for even Cerberus or Elliot wouldn't do with a straight face

Westerwaelder wrote:

VS11 wrote:

jetwet1 wrote:

From what I have been able to dig up in the last couple of hours, VS pays about 0.6% of the GROSS revenue it earns to the Virgin Group, so roughly 170m pounds off the top of it's earnings last year went to the Virgin Group. You do the math for each year and it is very easy to see why VS has had a hard time being profitable. Add say 100m pounds (a very rough earnings - taxes etc) to each of the last 10 years and you get a whole different picture of their finances.

Royalties are always paid on gross revenue. And rate of 0.6% is very very low, with typical rates starting at 3%.

Factors Affecting Royalty Rates in Brand Licensing, Part One
https://www.flowhaven.com/resources/fac ... s-part-one

Some Virgin spokesman came out last week saying that SRB has not been paid by VS for years. Now we are learning the group he ownes has made £170million from them in 2019? £170 million in a single year from a company that is loss making? How much more spin so we need to uncover before you stop blindly defending this set up? And your line of defence is that 0.6% is low for royalties? It seems a lot of money when it's the difference between loss (no due in the UK) and profit (taxes on profits to be paid in the UK). And guess where the £170 million went? A tax haven... do me a favour. If this is really true, that would make fools out of all of us. Poor SBR, hasn't seen a penny from VS doesn't have enough cash to put into VS...just taken the lot and more

Can someone confirm if the 0.6% = £170 million in 2019 is true?

We might want to check where Virgin Enterprises is based.
From what I can tell, it is the UK.

I also believe Necker Island is part of Virgin Enterprises. So profits from the island go to the UK?

There is loads of anti Branson shouting here, and a lot of it seems to be based on incorrect assumptions.

Oh, and remember. The 170 doesn't go to Branson.

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Junglejames wrote:

Westerwaelder wrote:

VS11 wrote:

Royalties are always paid on gross revenue. And rate of 0.6% is very very low, with typical rates starting at 3%.

Factors Affecting Royalty Rates in Brand Licensing, Part One
https://www.flowhaven.com/resources/fac ... s-part-one

Some Virgin spokesman came out last week saying that SRB has not been paid by VS for years. Now we are learning the group he ownes has made £170million from them in 2019? £170 million in a single year from a company that is loss making? How much more spin so we need to uncover before you stop blindly defending this set up? And your line of defence is that 0.6% is low for royalties? It seems a lot of money when it's the difference between loss (no due in the UK) and profit (taxes on profits to be paid in the UK). And guess where the £170 million went? A tax haven... do me a favour. If this is really true, that would make fools out of all of us. Poor SBR, hasn't seen a penny from VS doesn't have enough cash to put into VS...just taken the lot and more

Can someone confirm if the 0.6% = £170 million in 2019 is true?

We might want to check where Virgin Enterprises is based.
From what I can tell, it is the UK.

I also believe Necker Island is part of Virgin Enterprises. So profits from the island go to the UK?

There is loads of anti Branson shouting here, and a lot of it seems to be based on incorrect assumptions.

Oh, and remember. The 170 doesn't go to Branson.

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Except the ultimate ownership is in a tax Haven. Branson is a tax exile so he doesn't pay tax. Tax is for small people. I've never worked at property deal which didn't involve a tax haven in your shell companies. I mean that's fair enough for tax neutrality with all the LP's declaring and paying tax on their ultimate income. Somewhat okay for the dentist in Chicago. But the big guys never pay any tax. Always resident in a tax haven and a non-domiciled.

Galwayman wrote:

blooc350 wrote:

What if EK or EY takes over. Go head to head with BA and will give the Americans a run for their money on the Transatlantic routes.

That would be fantastic but unlikely to happen unfortunately .

The most important airlines to the UK economy (yes economy, not ego) are probably 1) BA , 2) Ryanair, 3) Easyjet 4) Emirates .... VS are irrelevant really, they only fly a handful of routes from a small number of airlines, do nothing exceptional for connectivity , make little if any profit ..

This thing where Branson skims his money on gross revenues is probably why he's been happy to run it as a basket case for so many years - Uk civil servants obviously sussed him out years ago

So it is fantastic if EK or EY took Virgin Atlantic over?
So Virgin shouldn't get loan guarentees from the British government as it is bailing out rich tax dodgers, but it is ok for Branson to get a windfall through a pay out from Arab governments?
Yep, ok.



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BealineV953 wrote:

VS11 wrote:

Westerwaelder wrote:

Can someone confirm if the 0.6% = £170 million in 2019 is true?

Maybe this is where you should have started. Just because there is a royalty agreement in place does not mean the Virgin Group is receiving the royalties.

The piece in The Times said that the undisclosed royalty was paid to Virgin Enterprises, the 'licencing division' of the Virgin organisation.
The article says that for 2018 Virgin Enterprises reported revenues of £75m. That included £11m from Virgin Money, £10m from Virgin Media and undisclosed royalties from Virgin Active, Virgin Australia and Virgin Cruises. Virgin Enterprises made a pre-tax profit of £51m. It paid an £85m dividend to its sole shareholder, Virgin Group Holdings, headquartered in the BVI.
NB - the dividend of £85m is not a typo, the dividend was greater than the annual revenue.

With respect to everyone else, many of you from post # 752 - 784 have in fact made some very valid and factual statements not based on rumors or personal opinion.

(I'm speaking from a postion where I would be privy of this info)

You have pretty much nailed it: whether or not VS is profitable is almost irrelevant to the shareholders because no matter what happens, prior to any earnings/losses reported

1.) Branson/Virgin Group Holdings (in the BVI) gets paid a pre-tax royalty for the name right off the top - the payment goes to Virgin Enterprises located in the UK, and then transferred to BVI. So SRB makes his money either way. There is some tax paid from the Virgin Enterprises side, but there are loop holes taken advantage of here.
2.) The statement in media "SRB has not received a payment in years from VS" is true, but a play on words from Virgin Group - he has not received a payment through the 51% ownership of VS, beause they were unprofitable. In addition, he does not receive direct payments. It goes to Virgin Group.
3.) DL - through their agreement on 49% ownership also receive a payment right off the top to recoup their initial investment of $360 mill. The JV is ireelevant in this case, because its 50/50 on ticket sales - so whatever revenue is made across the atlantic from either partner is split.

So in simple terms, Revenue - Virgin Licensing Royalty - DL Cost Recuperation = Reported Profit/Loss..

Virgin Group/SRB get their money & DL get more access to LHR

For those of you looking for exact numbers on money paid - good luck! It's purposely made to be vague.

Cedar

Junglejames wrote:

Westerwaelder wrote:

VS11 wrote:

Royalties are always paid on gross revenue. And rate of 0.6% is very very low, with typical rates starting at 3%.

Factors Affecting Royalty Rates in Brand Licensing, Part One
https://www.flowhaven.com/resources/fac ... s-part-one

Some Virgin spokesman came out last week saying that SRB has not been paid by VS for years. Now we are learning the group he ownes has made £170million from them in 2019? £170 million in a single year from a company that is loss making? How much more spin so we need to uncover before you stop blindly defending this set up? And your line of defence is that 0.6% is low for royalties? It seems a lot of money when it's the difference between loss (no due in the UK) and profit (taxes on profits to be paid in the UK). And guess where the £170 million went? A tax haven... do me a favour. If this is really true, that would make fools out of all of us. Poor SBR, hasn't seen a penny from VS doesn't have enough cash to put into VS...just taken the lot and more

Can someone confirm if the 0.6% = £170 million in 2019 is true?

We might want to check where Virgin Enterprises is based.
From what I can tell, it is the UK.

I also believe Necker Island is part of Virgin Enterprises. So profits from the island go to the UK?

There is loads of anti Branson shouting here, and a lot of it seems to be based on incorrect assumptions.

Oh, and remember. The 170 doesn't go to Branson.

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VS11 questioned the number but regardless, who does the money ultimately end up with? The Virgin Group? Where are they based?

VS making no money as paying Virgin Enterprise. Virgin Enterprise making no money (income - dividend = negative balance) asit pays Virgin Group... do you see the pattern? None of the UK companies in this line pay tax as they are all making a loss. The money goes to Virgin Group which is based where? You guessed it: BVI

Junglejames wrote:

Westerwaelder wrote:

VS11 wrote:

Royalties are always paid on gross revenue. And rate of 0.6% is very very low, with typical rates starting at 3%.

Factors Affecting Royalty Rates in Brand Licensing, Part One
https://www.flowhaven.com/resources/fac ... s-part-one

Some Virgin spokesman came out last week saying that SRB has not been paid by VS for years. Now we are learning the group he ownes has made £170million from them in 2019? £170 million in a single year from a company that is loss making? How much more spin so we need to uncover before you stop blindly defending this set up? And your line of defence is that 0.6% is low for royalties? It seems a lot of money when it's the difference between loss (no due in the UK) and profit (taxes on profits to be paid in the UK). And guess where the £170 million went? A tax haven... do me a favour. If this is really true, that would make fools out of all of us. Poor SBR, hasn't seen a penny from VS doesn't have enough cash to put into VS...just taken the lot and more

Can someone confirm if the 0.6% = £170 million in 2019 is true?

We might want to check where Virgin Enterprises is based.
From what I can tell, it is the UK.

I also believe Necker Island is part of Virgin Enterprises. So profits from the island go to the UK?

There is loads of anti Branson shouting here, and a lot of it seems to be based on incorrect assumptions.

Oh, and remember. The 170 doesn't go to Branson.

Sent from my SM-G930F using Tapatalk

VS11 questioned the number but regardless, who does the money ultimately end up with? The Virgin Group? Where are they based?

VS making no money as paying Virgin Enterprise. Virgin Enterprise making no money (income - dividend = negative balance) asit pays Virgin Group... do you see the pattern? None of the UK companies in this line pay tax as they are all making a loss. The money goes to Virgin Group which is based where? You guessed it: BVI

Ok, having checked up on this, and to educate myself on areas I wasn't aware of.

From what I can tell, the below is the setup. Very similar to what Cedar mentioned:

Overall holding company is Virgin Group Holdings, which is 100% owned by Branson and based in BVI.

They have a couple of UK based subsidiaries.
Virgin Enterprises and Virgin Group.

Virgin Enterprises is the licensing arm of the Virgin brand, and yes, is where Branson would seem to make his money, with little of it needing to be touched by UK taxpayers (There will be tax on the revenue though).

Virgin Group is the parent company of all the wholely owned brands. Including the owner of the shares in respective firms, ie the 51% of VS.

So in the case of VS. There will be tax paid to the UK government. There will be a brand royalty paid to Virgin Enterprises, and depending on how well they perform, a dividend paid to Virgin Group. I have left Delta out of it.

The Virgin Group will pay tax to the UK government, and possibly a dividend to Virgin Group Holdings.

Necker Island is run by a firm owned by Virgin Group. So even money made from the island makes its way to the UK.

So yes, Virgin Group Holdings is in a tax haven, and Branson seemingly earns a nice wage from licensing the Virgin name.
But the majority of the operation is based in the UK, employs UK citizens, and pays UK tax.
I'd suggest the majority of the money stays in the UK as well. Depending on what sort of dividend is paid by Virgin Group to Virgin Group Holdings.

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Westerwaelder wrote:

Junglejames wrote:

Westerwaelder wrote:

Some Virgin spokesman came out last week saying that SRB has not been paid by VS for years. Now we are learning the group he ownes has made £170million from them in 2019? £170 million in a single year from a company that is loss making? How much more spin so we need to uncover before you stop blindly defending this set up? And your line of defence is that 0.6% is low for royalties? It seems a lot of money when it's the difference between loss (no due in the UK) and profit (taxes on profits to be paid in the UK). And guess where the £170 million went? A tax haven... do me a favour. If this is really true, that would make fools out of all of us. Poor SBR, hasn't seen a penny from VS doesn't have enough cash to put into VS...just taken the lot and more

Can someone confirm if the 0.6% = £170 million in 2019 is true?

We might want to check where Virgin Enterprises is based.
From what I can tell, it is the UK.

I also believe Necker Island is part of Virgin Enterprises. So profits from the island go to the UK?

There is loads of anti Branson shouting here, and a lot of it seems to be based on incorrect assumptions.

Oh, and remember. The 170 doesn't go to Branson.

Sent from my SM-G930F using Tapatalk

VS11 questioned the number but regardless, who does the money ultimately end up with? The Virgin Group? Where are they based?

VS making no money as paying Virgin Enterprise. Virgin Enterprise making no money (income - dividend = negative balance) asit pays Virgin Group... do you see the pattern? None of the UK companies in this line pay tax as they are all making a loss. The money goes to Virgin Group which is based where? You guessed it: BVI

I believe you will find Virgin Enterprises pay some tax on revenue.

Brand fees are nothing new. This isn't the reason Virgin Atlantic may or may not be loss making.
Remember, it isn't only Virgin Enterprises taking money from them. Delta are as well.
It was mentioned they take a percentage of revenues to recoup their initial outlay. Do they also take a dividend on their 49% shareholding?

Let's see who takes the most money out of VS.

Oh, and you may be mixing up Virgin Group and Virgin Group Holdings.

I'm neither a hater or a lover of Branson, But the personal abuse thrown around on here just because he says VS would like some loan guarantees is extreme.

The airline is seemingly in trouble, and £170 million to Virgin Enterprises is not what caused it.

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VS11 wrote:

Royalties are always paid on gross revenue. And rate of 0.6% is very very low, with typical rates starting at 3%.

Factors Affecting Royalty Rates in Brand Licensing, Part One
https://www.flowhaven.com/resources/fac ... s-part-one

There is a typo in my original post, early morning no coffee, the rate is 0.06%, not 0.6%, but remember, this is on the gross revenue, money taken straight off the top before anything else. You are correct that anything under 3-5% is low, however, in an industry that typically has amazingly low margins, trying to get a 3-5% rate would be next to impossible.

Boeing74741R wrote:

jetwet1 wrote:

BealineV953 wrote:

A detailed report in the Business section of The Times on 22nd April states that Virgin Atlantic pays an "undisclosed" royalty to Virgin Enterprises.

From what I have been able to dig up in the last couple of hours, VS pays about 0.6% of the GROSS revenue it earns to the Virgin Group, so roughly 170m pounds off the top of it's earnings last year went to the Virgin Group. You do the math for each year and it is very easy to see why VS has had a hard time being profitable. Add say 100m pounds (a very rough earnings - taxes etc) to each of the last 10 years and you get a whole different picture of their finances.

Thanks for looking into that. I assume by last year you mean 2018 given the 2019 report isn't yet out? Forgive my limited understanding of accounting, but is that £170m part of the figure taken off to arrive at the figure declared as a pre-tax profit/loss?

If that's correct about the royalties being that high and if that is removed before you get to the pre-tax profit/loss figure, it changes the narrative about VS being a loss-making outfit. If it is harming the VS bottom line, then there's a debate to be had about the necessity of those funds going to the Virgin Group moving forward, especially given SRB (via the Virgin Group) is the majority owner and founder.

There is a small mistake in my math, maybe, I took the high end of the royalty percentage and I really should have taken the low to be conservative.

Yes that was from the 2018 number. From what I can find VS are estimating 2019 Gross revenue at 2.45B, 0.05% of that is 122.5M....There are companies, like AS who are paying .07%, but I cannot find a hard figure on VS.

Even if you think the Virgin Group decided to cut VS a break and only charge them 1/2 the normal rate, you still get 61M, which makes the P/L's look a whole lot different.

Westerwaelder wrote:

VS11 questioned the number but regardless, who does the money ultimately end up with? The Virgin Group? Where are they based?

VS making no money as paying Virgin Enterprise. Virgin Enterprise making no money (income - dividend = negative balance) asit pays Virgin Group... do you see the pattern? None of the UK companies in this line pay tax as they are all making a loss. The money goes to Virgin Group which is based where? You guessed it: BVI

Pretty much sums it up from what I am seeing.

Now a couple of things, just to be clear.

I have no issues with VS, I flew them for many years, I was gold with Freeway/Flying Club for nearly a decade. Around 2000 they started to do things that from a business perspective I didn't like and in the end my boss hated, we ended up pulling our Corp contract with them over a few things.

Since 2000 I have flown with them twice, the last time was last year and honestly, it was one of the best flights I have ever been on.

My posts above were not in any way meant to be a bashing session on VS, they were also put together with piece of info I have been able to find and I will say, the information is limited and I could be very wrong about the whole thing, but I don't think so.

Junglejames wrote:

Westerwaelder wrote:

Junglejames wrote:

We might want to check where Virgin Enterprises is based.
From what I can tell, it is the UK.

I also believe Necker Island is part of Virgin Enterprises. So profits from the island go to the UK?

There is loads of anti Branson shouting here, and a lot of it seems to be based on incorrect assumptions.

Oh, and remember. The 170 doesn't go to Branson.

Sent from my SM-G930F using Tapatalk

VS11 questioned the number but regardless, who does the money ultimately end up with? The Virgin Group? Where are they based?

VS making no money as paying Virgin Enterprise. Virgin Enterprise making no money (income - dividend = negative balance) asit pays Virgin Group... do you see the pattern? None of the UK companies in this line pay tax as they are all making a loss. The money goes to Virgin Group which is based where? You guessed it: BVI

I believe you will find Virgin Enterprises pay some tax on revenue.

Brand fees are nothing new. This isn't the reason Virgin Atlantic may or may not be loss making.
Remember, it isn't only Virgin Enterprises taking money from them. Delta are as well.
It was mentioned they take a percentage of revenues to recoup their initial outlay. Do they also take a dividend on their 49% shareholding?

Let's see who takes the most money out of VS.

Oh, and you may be mixing up Virgin Group and Virgin Group Holdings.

I'm neither a hater or a lover of Branson, But the personal abuse thrown around on here just because he says VS would like some loan guarantees is extreme.

The airline is seemingly in trouble, and £170 million to Virgin Enterprises is not what caused it.

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DL will take a dividend only if profit is made, otherwise they will only take a payment of cost recuperation and this has a deadline (I believe the deadline was this year 2020). So basically if VS is unprofitable, DL has a guarantee of at least recuperating cost. And any investor who potentailly takes over (if that happens) will be locked in to paying the DL portion off.
DL has since extended the deadline due to current situation - but they have protected themselves quite well. They knew exactly what they were investing into.

Cedar

Has anyone here taken the time to actually look at the financial results over the past few years?
I'm happy to be corrected here as I'm no financial expert, however the information from 2015-2018 is freely available on Virgins website.

Net Profit // Taxes paid/credited
2015 +80.1m // -7.4m
2016 +187.3m // -44.3m
2017 -48.3m // +10.5m
2018 -38.4m // -21.6m

2016 saw a huge leap in profits, unsure why but we'll run with it. So all of these combined mean VS actually made a £180.7m profit over those most recent 4 years.
The numbers on the right are the taxes paid, therefore total taxes paid when combined over the 4 years is £62.8m.
Again, happy to be (politely) corrected on this if there's logical explanations.

jetwet1 wrote:

There is a small mistake in my math, maybe, I took the high end of the royalty percentage and I really should have taken the low to be conservative.

Yes that was from the 2018 number. From what I can find VS are estimating 2019 Gross revenue at 2.45B, 0.05% of that is 122.5M....There are companies, like AS who are paying .07%, but I cannot find a hard figure on VS.

Even if you think the Virgin Group decided to cut VS a break and only charge them 1/2 the normal rate, you still get 61M, which makes the P/L's look a whole lot different.

There is a mistake in your math that is not very minor. That 122.5M number needs to be divided by 100 so you get 1.225m as a royalty. Hardly an astonishing amount.

From Travel Weekly, Virgin deny the Sunday Telegraph newstory :
https://www.travelweekly.co.uk/articles ... uyer-talks

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Turnover (£m) 1,630 2,337 2,579 2,357 2,700 2,740 2,870 2,828 2,782 2,689 2,664 2,781
Profit (EBT) (£m) 68.0 22.9 68.4 −132.0 18.5 −80.2 −69.9 −174.7 87.5 23.0 −28.4 −12.8

https://en.wikipedia.org/wiki/Virgin_Atlantic

Seems that profitability has been patchy at best for years.

Are they a good investment for public money?.

Clearly the Govt cannot support the entire economy single handed.

As I’ve said, I don’t think you know what you are talking about and I don’t think you are what you profess to be.

Dmoney wrote:

I work in corporate finance.

This is what you are holding yourself out as being. You do not state what role, but I assume you would not profess (or admit?) to being the cleaner. However, you do not seem to understand how VS’s business works and how it returns value to the Virgin group amongst others.

Dmoney wrote:

VS is not a viable airline at the best of times. They've made a big loss over the last 5 years.

Dmoney wrote:

Virgin was a zombie company going into this kept alive by low interest rates as they've never consistently earned a return on capital which justifies their existence.

Dmoney wrote:

It wasn't a profitable business going into the crisis, it goes under now. That's capitalism, get over it. Creative destruction.

Leaving aside your apparent lack of understanding of the term “creative destruction”, or the difference between “profitability” and “viability” or why businesses exist, would you agree it is a material oversight for someone in the corporate finance world to have not understood the royalty payment arrangements and how that affects profitability?

You also seem to have a confused position on whether Branson is “actually rich”. See below.

Dmoney wrote:

Or Branson whining like a little girl that it's unreasonable to ask him to liquidate assets in a distressed market. Turns out the chap is broke. Because being ACTUALLY rich means you are liquid. If you aren't rich enough to have 200 million in liquid securities then your just another leveraged liar fronting you have money when you don't?

Leaving aside the unsophisticated language, you do realise (I’m sure you do - you work in “corporate finance”) it is possible to be cash rich but asset poor and vice versa?

In any event, you may wish to hear that Bransons Virgin Group has already committed 250m dollars to help various Virgin companies tackle Coronavirus. By your own standard, Branson is not a leveraged liar but is “actually rich”. See link below.

https://www.virgin.com/richard-branson/ ... -employees

The premise of your position on him seems to be fundamentally wrong, unless you are now going to revise your criteria?


Personally, I think you are against VS not because of any financial reason as asserted, but because you have a personal animosity to either Branson, or anyone successful. You also appear to have some form of British prejudice.

This is demonstrated by by the following examples (there are many more like this):

Dmoney wrote:

You haven't grasped you are asking for a bailout for rich tax dodgers paid for by dirt poor British people.

Dmoney wrote:

Why do you lot all hate unions and the working man but want to give a bailout to rich capitalists?

Dmoney wrote:

Branson can go jump off a bridge the tax dodging narcissist.

Dmoney wrote:

Branson is a tax exile so he doesn't pay tax. Tax is for small people.

Dmoney wrote:

Why are you so desperate to suck up to rich people? Why is it socialism for the rich but Brits starving to death because their benefits have been cut.

To summarise, I’ve got no issue with you holding the opinion that VS should be allowed to fail and to dislike Richard Branson. But be honest about it. You’re new in here, pease don’t pretend to be something you are obviously not, because the faux financial rationale you keep pushing is transparently wrong, fools no one and devalues your input.

VS11 wrote:

jetwet1 wrote:

There is a small mistake in my math, maybe, I took the high end of the royalty percentage and I really should have taken the low to be conservative.

Yes that was from the 2018 number. From what I can find VS are estimating 2019 Gross revenue at 2.45B, 0.05% of that is 122.5M....There are companies, like AS who are paying .07%, but I cannot find a hard figure on VS.

Even if you think the Virgin Group decided to cut VS a break and only charge them 1/2 the normal rate, you still get 61M, which makes the P/L's look a whole lot different.

There is a mistake in your math that is not very minor. That 122.5M number needs to be divided by 100 so you get 1.225m as a royalty. Hardly an astonishing amount.

I give in, my head is firmly stuck up my butt...I was right the first time, It's between .5 and .7

My apologies for any confusion, I'm going to cook dinner and drink a beer.

DobboDobbo wrote:

As I’ve said, I don’t think you know what you are talking about and I don’t think you are what you profess to be.

Dmoney wrote:

I work in corporate finance.

This is what you are holding yourself out as being. You do not state what role, but I assume you would not profess (or admit?) to being the cleaner. However, you do not seem to understand how VS’s business works and how it returns value to the Virgin group amongst others.

Dmoney wrote:

VS is not a viable airline at the best of times. They've made a big loss over the last 5 years.

Dmoney wrote:

Virgin was a zombie company going into this kept alive by low interest rates as they've never consistently earned a return on capital which justifies their existence.

Dmoney wrote:

It wasn't a profitable business going into the crisis, it goes under now. That's capitalism, get over it. Creative destruction.

Leaving aside your apparent lack of understanding of the term “creative destruction”, or the difference between “profitability” and “viability” or why businesses exist, would you agree it is a material oversight for someone in the corporate finance world to have not understood the royalty payment arrangements and how that affects profitability?

You also seem to have a confused position on whether Branson is “actually rich”. See below.

Dmoney wrote:

Or Branson whining like a little girl that it's unreasonable to ask him to liquidate assets in a distressed market. Turns out the chap is broke. Because being ACTUALLY rich means you are liquid. If you aren't rich enough to have 200 million in liquid securities then your just another leveraged liar fronting you have money when you don't?

Leaving aside the unsophisticated language, you do realise (I’m sure you do - you work in “corporate finance”) it is possible to be cash rich but asset poor and vice versa?

In any event, you may wish to hear that Bransons Virgin Group has already committed 250m dollars to help various Virgin companies tackle Coronavirus. By your own standard, Branson is not a leveraged liar but is “actually rich”. See link below.

https://www.virgin.com/richard-branson/ ... -employees

The premise of your position on him seems to be fundamentally wrong, unless you are now going to revise your criteria?


Personally, I think you are against VS not because of any financial reason as asserted, but because you have a personal animosity to either Branson, or anyone successful. You also appear to have some form of British prejudice.

This is demonstrated by by the following examples (there are many more like this):

Dmoney wrote:

You haven't grasped you are asking for a bailout for rich tax dodgers paid for by dirt poor British people.

Dmoney wrote:

Why do you lot all hate unions and the working man but want to give a bailout to rich capitalists?

Dmoney wrote:

Branson can go jump off a bridge the tax dodging narcissist.

Dmoney wrote:

Branson is a tax exile so he doesn't pay tax. Tax is for small people.

Dmoney wrote:

Why are you so desperate to suck up to rich people? Why is it socialism for the rich but Brits starving to death because their benefits have been cut.

To summarise, I’ve got no issue with you holding the opinion that VS should be allowed to fail and to dislike Richard Branson. But be honest about it. You’re new in here, pease don’t pretend to be something you are obviously not, because the faux financial rationale you keep pushing is transparently wrong, fools no one and devalues your input.

Great post. Couldn’t agree more. Too much of this thread is taken up by a handful of people who seem unable to separate their dislike or envy of SRB from the airline and the people who depend on it, either to take holidays, visit families or indeed to keep a roof over their head. Ironically, they seem unable to grasp that if VS did fail he would be the one person whose quality of life wouldn’t suffer one bit.

Thanks to the efforts of many others on here, a lot of the easily regurgitated, rarely fact checked media clickbait headlines have been dispelled.

There may well be better investments out there but VS, like every other airline (many of whom are currently in the process of receiving significant government support) are in this position solely because of a once in a lifetime event that is totally beyond their control. Aside from this, they would have been profitable in 2020

DobboDobbo wrote:

As I’ve said, I don’t think you know what you are talking about and I don’t think you are what you profess to be.

Dmoney wrote:

I work in corporate finance.

This is what you are holding yourself out as being. You do not state what role, but I assume you would not profess (or admit?) to being the cleaner. However, you do not seem to understand how VS’s business works and how it returns value to the Virgin group amongst others.

Dmoney wrote:

VS is not a viable airline at the best of times. They've made a big loss over the last 5 years.

Dmoney wrote:

Virgin was a zombie company going into this kept alive by low interest rates as they've never consistently earned a return on capital which justifies their existence.

Dmoney wrote:

It wasn't a profitable business going into the crisis, it goes under now. That's capitalism, get over it. Creative destruction.

Leaving aside your apparent lack of understanding of the term “creative destruction”, or the difference between “profitability” and “viability” or why businesses exist, would you agree it is a material oversight for someone in the corporate finance world to have not understood the royalty payment arrangements and how that affects profitability?

You also seem to have a confused position on whether Branson is “actually rich”. See below.

Dmoney wrote:

Or Branson whining like a little girl that it's unreasonable to ask him to liquidate assets in a distressed market. Turns out the chap is broke. Because being ACTUALLY rich means you are liquid. If you aren't rich enough to have 200 million in liquid securities then your just another leveraged liar fronting you have money when you don't?

Leaving aside the unsophisticated language, you do realise (I’m sure you do - you work in “corporate finance”) it is possible to be cash rich but asset poor and vice versa?

In any event, you may wish to hear that Bransons Virgin Group has already committed 250m dollars to help various Virgin companies tackle Coronavirus. By your own standard, Branson is not a leveraged liar but is “actually rich”. See link below.

https://www.virgin.com/richard-branson/ ... -employees

The premise of your position on him seems to be fundamentally wrong, unless you are now going to revise your criteria?


Personally, I think you are against VS not because of any financial reason as asserted, but because you have a personal animosity to either Branson, or anyone successful. You also appear to have some form of British prejudice.

This is demonstrated by by the following examples (there are many more like this):

Dmoney wrote:

You haven't grasped you are asking for a bailout for rich tax dodgers paid for by dirt poor British people.

Dmoney wrote:

Why do you lot all hate unions and the working man but want to give a bailout to rich capitalists?

Dmoney wrote:

Branson can go jump off a bridge the tax dodging narcissist.

Dmoney wrote:

Branson is a tax exile so he doesn't pay tax. Tax is for small people.

Dmoney wrote:

Why are you so desperate to suck up to rich people? Why is it socialism for the rich but Brits starving to death because their benefits have been cut.

To summarise, I’ve got no issue with you holding the opinion that VS should be allowed to fail and to dislike Richard Branson. But be honest about it. You’re new in here, pease don’t pretend to be something you are obviously not, because the faux financial rationale you keep pushing is transparently wrong, fools no one and devalues your input.

You can't be this slow..... At no stage in Branson open letter does he inject his own cash in the business. Committing 250m can just as easily mean drawing down on your committed revolving facilities. You love the chap for some reason and that's your perogative, just don't ask broke British people who pay taxes to pay for a tax exile like Branson.

If you believe he lives in BVI for ANYTHING other than tax reasons I've a bridge to sell you. Of course all the shell companies pay the applicable taxes along the way but you structure your liabilities so that minimized within common decency.


If it's a viable business then why won't banks or the government give him a loan? I'm going to credit soon for approval on a airport facility restructuring. The syndicate kicked back on then orginial projections by the borrower post covid but ultimately there is a plan everyone is going for approval on. The problem is, if I get approval assuming 80% reduction until September followed by 40% to February and then slow ramp to 70% through 2022. If the RM on a virgin deal comes in assuming 50% capacity by December then credit wouldn't be taking a consistent view. But Virgin need to assume much faster recovery than other airlines or airports for their model to have any hope of showing them being able to repay further loans, which they can't as their debt burden is already to high and their profitability too weak.

You don't lend further into a bad credit risk, you show some credit discipline and if there isn't a reasonable plan for recovery you take your losses. Further lending just makes you final default exposure worse. Under IFRS9 I'd assume they will have to take a full provision on virgin regardless of the outcome, it's definitely stage 2 no matter how much latitude regulators give on covid provisioning.

If worked at the treasury giving money to Virgin is not something I want my hands on. You can smell the select committee from here.

bennett123 wrote:

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Turnover (£m) 1,630 2,337 2,579 2,357 2,700 2,740 2,870 2,828 2,782 2,689 2,664 2,781
Profit (EBT) (£m) 68.0 22.9 68.4 −132.0 18.5 −80.2 −69.9 −174.7 87.5 23.0 −28.4 −12.8

https://en.wikipedia.org/wiki/Virgin_Atlantic

Seems that profitability has been patchy at best for years.

Are they a good investment for public money?.

Clearly the Govt cannot support the entire economy single handed.

Again I don't think anybody denies their P&L over the years has been a roller coaster between profits and loss. I will repeat my claim from last week that profits from more than 5 or so years ago (and especially during the 49% SQ ownership days) are irrelevant to the current situation. The VS of today is different to the VS of 10 years ago in various areas from fleet and network to strategy and leadership. They even had a plan to return to profitability during 2020/2021 before COVID-19 struck and Flybe went under.

To answer your last two lines, I will repeat my regular statement that as the government have effectively added to the current predicament airlines see themselves in by telling their core markets to stay at home and advise against all but essential travel (obviously on the grounds of public health), they have some obligation to support businesses to see them through to the other side. The aviation sector is one in particular and the UK aviation sector is still reeling from the loss of two major airlines within 6 months of each other (Thomas Cook and Flybe). For clarity, no I don't think government support should be unlimited. I will also repeat my earlier prediction that if this crisis carries on for many more months, BA will probably have to reconsider their earlier claim that they don't need help from the government.

No matter some people's prejudices on here, this crisis is unprecedented and all businesses across all industries are impacted one way or another.