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Tycoon unable to stop sale of airline

Branson ‘sad’ after making £550m from sale of Virgin America

Sir Richard Branson BBC vidSir Richard Branson has expressed his frustration at selling Virgin America despite being in line for a £550 million windfall.

The US airline has been bought by Alaska Air for $2.6bn (£1.8bn) in cash.

The tycoon, whose personal wealth is estimated at about £4 billion, expressed sadness at selling the airline but said a 25% limit on non-US share ownership meant his power over the decision was limited. Sir Richard said that there was “nothing I could do to stop it”.

He said that he started Virgin America in 2007 out of frustration because flying in the US was an “awful experience” and declared his pride in what the airline achieved. It now flies to 21 destinations in the US and Mexico.

Writing in a blog, he said: “I would be lying if I didn’t admit sadness that our wonderful airline is merging with another.

“Because I’m not American, the US Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover.”

“When Virgin America launched, fleetwide Wi-Fi was considered a radical idea, and so was touch-screen entertainment at every seat, and brand new and beautifully designed cabins. Airlines have had to invest in better products to try to compete,” he said.

His Virgin Group has doubled the value of its 30% stake in the business which was floated on the stock market two years ago with a value of £650m.

It is the the ninth biggest US airline by passenger numbers, with about 1.5% of domestic flight capacity compared with 5% for Alaska Air.

Virgin America made a pre-tax profit of $61m on sales of $1.4bn in 2014.

Alaska Air, based in Seattle, will also be taking on Virgin America’s debt and aircraft operating leases. It said it would use the acquisition to expand in California and compete against the larger US airlines.

 

 

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