Cash crisis? Virgin says it's coming good on earnings

Click to follow
The Independent Online

Sir Richard Branson's world- wide earnings will reach £377m this year, according to his official spokesperson.

Deflecting long-standing gossip that the UK's most famous entrepreneur has cash- flow problems, Virgin is now making a profit after heavy investment in the past five years, said Will Whitehorn.

In the year to May, the company's earnings before interest, tax, depreciation and amortisation were £184m, he said, and by the end of the year will have more than doubled. Global sales for 2003 would be £4.3bn, he added.

"Everything has been going into profit over the last eight to nine months," said Mr Whitehorn. "Virgin made huge investments in the late 1990s, and they are all coming good now."

All the company's airlines are now profitable, recovering from the heavy losses built up after the turmoil of the 11 September terrorist attacks.

Sir Richard is also considering a major expansion in the Middle East, where there is little entrepreneurial com-petition.

Mr Whitehorn said that Virgin's airlines are looking to operate flights to Dubai and, when permission is granted, to Basra and Baghdad in Iraq.

He said Virgin Mobile had also been holding talks with local phone operators in Saudi Arabia with a view to launching a mobile service there. It is also hoping to expand in South Africa.

For years, Virgin's losses in the UK and the opacity of its founder's finances have prompted gossip that the Branson empire is not financially secure. Sir Richard holds his investments through offshore trusts in the British Virgin Islands.

In an interview with Bloomberg Markets, to be published at the end of this month, he says some financial losses mask heavy investments in market share, and that "sometimes the more money you're losing in a company, the more money you're making".

Sir Richard also says he is searching for a chief executive for a new US budget airline - Virgin America. He hopes to attract US private equity firms such as Texas Pacific Corp to take a majority stake in the venture.

He would have to sell more than half the equity, and he would only be allowed to own 25 per cent of the voting shares of the company due to US restrictions on foreign ownership of its airlines.

Sir Richard's empire includes Virgin Megastores, Virgin Mobile, airlines in Europe and Australia and transatlantic routes, and Virgin Trains. It also runs financial services, health clubs and cinemas around the world.