Monday, 11 March 2013
The Virgin Killler - APD
Some of his tactics, using PR to make unbelievable claims about his opponents and potential of his own business, are close to the mark, but fun.
Recently though some of his large businesses are starting to either struggle or lose their uniqueness. Virgin Media has become a brand only, with just a sliver of Branson capital in the business and certainly no Virgin management. Virgin trains lost their bid - well may have done, depends on the outcome of the UK Government dispute. There are though still many successes across his sprawling empire, particularly in the mobile phone sector.
Also, Virgin Atlantic, one of the original success stories has now had two terrible years. An annual loss of £135 million needs to be put in context of a business where in the good years it managed a once a record profits of £46.5 million, but in the past decade a good year was a £10m-20m profit. Since 1984 the airline has done well though to chart a path through many storms.
These record losses are going to be hard to sustain for the medium term, despite the new 49% ownership by Delta airlines, it is a tough job for the new CEO to try to turn around.
After all, Virgin is a holiday flight company to long-haul destination in a time when Air Passenger tax has put this out of the reach of many people who used to be able to afford it. With a UK hub this is an unfortunate turn of events for Virgin as few other countries have gone in for such punitive taxes as this.
With a small fleet and small set of destinations, the main Atlantic hub routes are also under pressure as BA and AA get closer and closer and BA also streamlines Iberia to make it less competitive across the Atlantic.
As ever, something will be done to preserve the brand and the face of the airline if not the infrastructure, but it is in a very tough spot - and another great example of how Government over-taxing and tax interference can have such a terrible effect on even large and stable businesses.