The season of giving is well and truly here, and Richard Branson is getting in on the festivities. Concluding a five year feud with IAG (British Airways owner) boss Willie Walsh, Branson is asking for a £1m donation to the Virgin Atlantic team to ‘settle this matter once and for all.’
It’s one of the more bizarre corporate tussles, a classic wager that Branson loves to dismiss before his pride gets in the way (as always). No one is surprised that he’s rejigging memories of a five year bet. This is, after all, a man who has been carrying out a ‘lifelong campaign’ to get rid of ties in the workplace.
Walsh, on the other hand is also claiming victory. Let’s delve into the details
A tale of two airlines
Rivalry between Virgin Atlantic and BA has existed for decades. The moment that brought the airlines to blows was all the way back in 1993, when Branson won a bitterly fought libel case against the airline worth about £3m.
The two had recently become direct competitors when Virgin moved their operations to Gatwick, and Branson said he had evidence of poaching customers from Virgin. He also accused BA of tampering with company files, and running a PR operation undermining Virgin’s reputation. Virgin won the suit, and BA apologised for a ‘dirty tricks’ campaign.
The two have remained rivals, and occasionally take barbs at each other with things like ‘anyone but British Airways’ discounts, but the two entered the headlines again in 2012 thanks to Willie Walsh.
In October, Branson announced that US air giant Delta would buy out Singapore Airlines’ 49% stake in Virgin Atlantic, with speculation that it would seek to replace Branson as controlling shareholder. This prompted Walsh to claim that it’d make commercial sense for the Virgin brand to dissolve altogether. After Branson said that he’d consider joining an airline alliance, Walsh suggested Delta would take effective control of the brand. Bye, bye, Virgin?
Branson was not happy. ‘The last time BA had to make a settlement to me for damages (in part for spreading not dissimilar false rumours) I split the money amongst our staff,’ Branson wrote on his blog. ‘Rather than suing them on this occasion, I will pay £1m to their staff if Virgin Atlantic disappears within, say, five years. If not, BA pays our staff £1m.’
Walsh took Branson up on the proposition, extending the stake to a ‘knee in the groin’ rather than cash because a million quid was not a significant enough loss for the ‘billionaire banker.’ To add insult to injury, Walsh compared Branson unfavourably to Ryanair boss Michael O’Leary.
‘I don't see that the guy [Branson] has anything that stands out in terms of what he's achieved in the industry,’ said Walsh at the launch of a new route in Seoul. ‘O'Leary has been a true pioneer and changed the industry. He's a very abrasive individual but he manages customer expectation like no one else in the world.’
He might be right, but ouch.
Of course, Branson took to his blog five years after the bet was made (he probably had it pencilled in his diary as soon as Walsh responded to his proposition) to remind everyone in a post replete with references to the 1993 case. ‘Although people might be amused to see me give Willie a low blow, I ideally have no wish to do so,’ wrote Branson, asking Walsh to cough up the £1m, and undoubtedly his pride too.
Walsh responded by saying it was instead he who was the rightful victor. In July, Branson ceded control of Virgin Atlantic after announcing that he would be selling 31% of the company to Air-France KLM, remaining as chairman with 20% interest.
‘As everyone knows, he no longer owns or controls the business, a reality confirmed by the decision to sell more of his shares, said Walsh. ‘He's lost the bet.’
Branson hit back yesterday, triggering a back and forth that, God help us, will be settled soon.
‘As of today, five years on, we still own and control 51% of Virgin Atlantic, appoint the majority of directors and the chairman,’ retorted Branson. ‘Next year we hope to complete a new joint venture, which will strengthen Virgin Atlantic and its brand for years to come. Either way, it’s clear he’s lost the bet.’
Whether Walsh will reply and what he will say is something we’ll probably be treated to in the next few days. If there’s one thing both men have in common, it’s taking things to the bitter end.
Image Credit: Hardo Muller/ Flickr