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With the global aviation industry coming under major distress, Richard Branson has reached out to the U.K. government for a loan to keep Virgin airline business afloat and ensure that the job losses are reduced. SPCE stock is down now.
The world is currently going through an unprecedented economic shock after the coronavirus pandemic has brought businesses to a standstill. Some of the most impacted industries have been the travel and the hospitality industry. During these uncertain times, airline tycoon and billionaire Richard Branson has recently out to his employees of the Virgin Group. The group currently over 70,000 employees from across 35 countries. In his letter, Branson wrote:
“Over the five decades I have been in business, this is the most challenging time we have ever faced. It is hard to find the words to convey what a devastating impact this pandemic continues to have on so many communities, businesses and people around the world. From a business perspective, the damage to many is unprecedented and the length of the disruption remains worryingly unknown”.
Mr. Branson decided to write an open letter to his employees after having received some criticism online. The criticism came amidst the company asking Virgin airlines employees to take 8 weeks on unpaid leave. Richard Fuller, the Conservative MP for North East Bedfordshire asked Branson to put his personal wealth at use for paying employees’ salaries.
To this, Branson responded saying that his net-worth depends on the value of Virgin businesses all around the world. He said that the net worth fluctuates with the business’s performance and is not cash in the bank.
However, Branson said that they have already committed a quarter of billion dollars to keep his business running. But with businesses disrupted the incoming cash flow is pretty weak at this stage. Besides, he said that he is even pouring his personal wealth across all the Virgin Group companies, of which Virgin Galactic is the biggest one.
Branson Requests Loan from the U.K. Government to Save Virgin Atlantic
Richard Branson has also requested the U.K. government to provide them with the essential loan in order to save Virgin Atlantic. He has also assured that this will be a commercial loan and returned back once business resumes to normal. Branson wrote:
“The reality of this unprecedented crisis is that many airlines around the world need government support and many have already received it. Without it there won’t be any competition left and hundreds of thousands more jobs will be lost, along with critical connectivity and huge economic value. Virgin Atlantic started with one plane 36 years ago. Over those years it has created real competition for British Airways, which must remain fierce for the benefit of our wonderful customers and the public at large.”
Virgin Galactic (SPCE) Stock Outlook
As Branson is known for taking ambitious bets in the past, he also started a spaceflight company called Virgin Galatic in 2004. Earlier this year, Virgin Galactic Holdings Inc (NYSE: SPCE) stock was doing wonders.
Starting 2020, the SPCE stock price jumped 270% by mid-February as investors rushed to pick the shares. However, the global market correction wiped-out all gains with the SPCE stock again touching $11 levels by mid-March.
At press time, in the pre-market, Virgin Galactic (SPCE) stock is trading at a price of $18.32 (-3.58%) with a market cap of $3.72 billion. Yesterday, it closed at $19, having gained 0.85% in the trading session. Analysts have already weighed-in their opinions on the stock. In a report submitted March 24, Morgan Stanley said that the fair value of SPCE is $24.
As per the report by InvestorPlace, SPCE charts indicate that the stock price could appreciate 50% from the current levels.