Branson may float airline

RICHARD Branson plans to float parts of his Virgin empire on the stock market to raise cash to fund his myriad business interests. The ebullient entrepreneur is looking to push ahead with the listing of Virgin's railway operations by the end of the year. Mr Branson could also look to float Virgin Travel, which owns Virgin Atlantic, his flagship airline, and could be valued at up to pounds 1bn.

After years of eschewing the stock market, Richard Branson is poised to renew his love-hate affair with the City. He floated the whole Virgin Group in 1986, only to go private two years later at a huge personal cost.

Since Virgin Atlantic was formed in 1984 it has become the jewel in Mr Branson's crown. It forms the main component of Virgin Travel, which made pre-tax profits of pounds 67.5m on turnover of around pounds 800m last year.

If Mr Branson does decide to float Virgin Travel, potential investors could be wooed by cut- price flights and holidays. The group also includes Virgin Holidays, which sells 250,000 package tours a year to long-haul destinations in Asia, Africa and the Caribbean. It has also just started Virgin Sun, a cut-price service to the Mediterranean.

A spokesman for Virgin admitted that flotation was a possibility for the travel business. But he added: "This is very much Richard's baby and the single biggest element of his business. It is pure speculation that Virgin Atlantic will be floated."

Virgin has already come under severe criticism for the performance of its rail business, which has taken over the running of the West Coast Main Line and Cross Country franchises. The business requires substantial investment.

City observers believe that Virgin needs extra cash to fund the expansion of the business empire, although Mr Branson has denied in the past that he would have to float Virgin Atlantic to finance growing investment.

British Airways is this week fighting to avoid a potential multi-million pound fine by the European Commission. It has 11 days to answer allegations by Virgin that it is unfairly competing with rival airlines in the United Kingdom by offering huge extra bonuses to travel agents who sell more of its flights. BA could be fined up to 10 per cent of its pounds 8bn-plus turnover.