Branson chases cash for Virgin US
SIR Richard Branson is poised to raise £100m to launch his budget airline, Virgin US.
He intends to find the money by either floating or borrowing against his Virgin mobile phone business. An announcement is expected shortly.
Branson has not discouraged speculation that Virgin Mobile could fetch up to £1.3bn on the stock market, but it is more likely that he will go to the debt markets rather than give up equity in the business.
The new airline, which will start flying next year, will have its headquarters in New York and operate from San Francisco. Over the next five years, Branson plans to recruit 3,000 workers and order a fleet of 30 Airbus A319s and A320s.
Under American law, the airline will be majority-owned by US investors. Talks with potential partners are going well, according to a spokesman for Branson.
Meanwhile, one of the main holding companies in the Virgin empire has clocked up another huge loss.
Barfair, the ultimate parent of several Branson businesses including soft drinks, bridal shops and his Necker island in the Caribbean, lost £80.6m in the year to January 2003, according to accounts just filed at Companies House. That was on top of a £98.9m deficit in the previous year. Most of the shortfall was in a division called 'management services and other'. This is believed to include Virgin Retail, which was hit by an unspecified writedown on the acquisition of the Our Price record chain. Only the clubs and hotels business made money.
Accumulated losses at Barfair now total £284m while the deficit on net assets is £110m. But given the labyrinthine structure of the Virgin empire, it is almost impossible to gauge the true state of Branson's finances.
Barfair director Will Whitehorn said the losses coincided with a 'rapid phase of investment' in Virgin ventures. These included mobile phones, now 'very profitable', and the Virgin Atlantic airline, which is back in the black after losing money in the wake of September 11.
Barfair was one of nine investment holding companies that Branson lends to, Whitehorn added.
