One on One with Sir Richard Branson, Founder & Chairman , Virgin Group Companies
Friday, October 10, 2008
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SUSIE GHARIB: So how are multinational companies navigating through this global financial crisis? Earlier today I got the view from British billionaire Sir Richard Branson, whose Virgin Group has a vast array of businesses in airlines, hotels, music, cell phones, and beverages. I began by asking Branson how the slowdown in the global economy is impacting his company.
SIR RICHARD BRANSON, FOUNDER & CHMN., VIRGIN GROUP COMPANIES: Well, I think Virgin has been pretty immune, not necessarily because there are less people flying or less people traveling on trains or, you know, less people going into health clubs or whatever. But more I think because there are casualties around us. So, you know, if you take Virgin Atlantic across the pond, a lot of airlines have gone bankrupt and therefore because Virgin Atlantic is strong and secure in offering a good product, you know, we've picked up that business. And then the another thing that has cushioned us against these difficulties is oil prices now coming down.
GHARIB: Mr. Branson, with those oil prices dropping as sharply as they have been, is that going to offset passengers who maybe are not going to be traveling as much on your airline or maybe traveling coach instead of business class? Will that offset the difference there?
BRANSON: Well, I think the lower fuel price is going to help in a lot of ways. First of all, I think we'll be able to reduce the cost of fares at a time when consumers are going to have less money in their pockets. And for a new airline like Virgin America that's doing great inside America, it's just going to mean that, you know, our cost base comes down. And so the airline can be profitable that much more quickly.
GHARIB: We hear that many companies are having difficulty getting credit in the credit markets as banks are unwilling to part with their cash. What has been your experience with Virgin Group?
BRANSON: Well, again, we've been fortunate. I mean, we're a cash rich group of companies and if an individual company needs to get funding, we've got Lloyds TSB (LYG), which is a secure British bank that are willing to lend to it.
GHARIB: Mr. Branson, you are such an innovative entrepreneur, do you have any innovative ideas as a solution to this that would loosen up the credit markets and get businesses to be fully functioning again?
BRANSON: I think as far as businesses are concerned, sadly they have got to batten down the hatches, they've got to realize that cash is king. You know, I think the market could even fall further I believe. And tighten their belts, and then try to survive the next year or two and then start re-investing, start employing more people and start working our way out of this, you know, the worst recession I've ever seen.
GHARIB: You say it is the worst recession you've ever seen, now you've always been a risk-taker, launching new projects. Are you turning cautious?
BRANSON: No, I don't think I'm turning cautious. But I think I've got to be prudent just watching the next, you know, three or four months. I mean, you know, companies which have got cash like Virgin I think actually should help other companies by investing some of that cash and expanding out. And we're not going to, for instance, stop our space ship program. We will continue to invest in that and be ready for launch in 18 months' time. We're not going to stop investing in our new airline in the States, Virgin America. We'll continue to grow the 350 companies we've got around the world. I will publish a book which I've just done today. I might as well plug it, called "Business Stripped Bare," and which will -- hopefully will give some people some ideas of the mistakes that I've made and how I've learned from them and maybe help people avoid mistakes themselves if they're building business.
GHARIB: Well, this is very refreshing to hear your ideas, thank you so much for coming on our program and good luck to you.
BRANSON: A pleasure to talk to you, thanks again.
