Richard Branson, Willie Walsh bet over Virgin Atlantic: Walsh refuses to concede he lost

Virgin Atlantic was about to form a commercial partnership with Delta. The American carrier was in talks with Singapore Airlines about buying the 49 per cent stake in Virgin which the Asian airline then owned - a deal which subsequently went through. Branson, obviously, thought this was a grand plan. Walsh reckoned it would be the death of Virgin Atlantic as a brand, and said so.

It boiled down to Branson suggesting a bet, with the loser due to pay the winner £1 million ($A1.76 million) to be shared among the winner's staff members.

"Let them put their money where their mouth is," Branson stated. "I will pay £1m to their staff if Virgin Atlantic disappears within, say, five years. If not, BA pays our staff £1m."

Walsh retorted that Branson was very rich, and that dropping seven figures wouldn't hurt him at all. And that a better idea would be for the winner to give the loser a blow to their intimate area. Which would hurt.

"Branson is a billionaire banker, allegedly," Walsh sniped. "I'm not a billionaire. So maybe a bet that would have as much pain to me as it would to him – a knee in the groin."

So who actually won?

Technically speaking, Branson. Virgin does indeed still own a 51 per cent stake in its own airline, and has certainly not vanished from the skies.

"We are still in the air and will be for many, many years to come," he argues. But Walsh pointed to a new deal whereby Virgin will sell a stake of the business to Air France-KLM as evidence to the contrary.

"Since Willie is trying to wriggle out of that bet by changing the terms of it – let's address that," Branson blasted in response.

"He now claims it was who controls the business at the end of five years. As of today, five years on, we still own and control 51 per cent of Virgin Atlantic, appoint the majority of directors and the chairman of the board."

Why is Walsh refusing to surrender?

In a statement, Walsh said: "When Richard Branson sold out to Delta five years ago, he said he would never give up control. As everyone knows, he no longer owns or controls the business, a reality confirmed by the decision to sell more of his shares to Air France."

And he has a point. In July of this year it was revealed that Air France-KLM was acquiring a 31 per cent stake in the portion of Virgin Atlantic held by Virgin Group (for a price of £220 million). Virgin will continue to fly under its own livery, and the brand will continue to exist, but its stake will be reduced to 20 per cent.

So Walsh was correct in his prediction that Branson would surrender majority ownership, but not within the agreed five-year time frame. This Air France-KLM deal is yet to go through.

Would Branson have actually carried out the forfeit?

Addressing Walsh's "churlish suggestion" of a knee to the groin five years ago, Branson said: "Although people might be amused to see me give Willie a low blow, I ideally have no wish to do so. So to settle this matter once and for all, and in the spirit of Christmas, I suggest he donates £1 million to Virgin Atlantic's team."

He added: "I would ask him to accept graciously that he has lost the bet and if he'd rather not pay the money to Virgin Atlantic employees then at least pay it to a charity that our people and he can both agree on."

Walsh's response? Crickets, thus far. Although his comments on Branson in the past have made his stance clear. Back in 2012 when the bet was first established, Walsh said: "I've said it publicly, I don't respect him in the way I respect other people in the industry, and that's a personal view."

How has Branson left it?

He's taken the high road and invited his opponent to lunch.

"Once this is over (one way or the other) lunch or dinner is on me Willie, and perhaps we can draw a line under the past," he concluded.

Walsh apparently snubbed this offer, a move Branson said was a "shame", since it's exactly how his last showdown with a BA exec wound up.

What showdown?

It's no secret that the relationship between British Airways and Virgin Atlantic has long had a bitter edge, with the national carrier viewing the latter as an upstart newcomer, intruding on its turf.

In 1993, amid a wider row about a supposed "dirty tricks" campaign waged by British Airways against Virgin, Branson sued his competitor for libel. BA, headed up by then-CEO Sir Colin Marshall, settled out of court, paying a legal bill which may have amounted to £3 million - as well as damages of £500,000 to Branson, and a further £110,000 to Virgin, which Branson reportedly shared out among his staff members.

"When a previous CEO Sir Colin Marshall lost a court case against Virgin Atlantic he graciously came to lunch at my home to apologise," Branson said today. "We buried the hatchet and became friends and spent the rest of his life working together on charitable issues. It's a shame the same can't apply to Willie Walsh."

What will happen to Virgin Atlantic going forward?

Virgin Atlantic's deal to sell a 31 per cent stake to Air France-KLM has been billed by the Virgin Group as "a strategic partnership" which will offer customers "access to the most comprehensive transatlantic route network via an extensive joint venture."

This partnership will provide more than 300 direct transatlantic flights a day between Europe, UK and the United States via twelve hubs on both sides of the Atlantic. Key cities covered will include Amsterdam, Atlanta, Boston, Cincinnati, Detroit, Los Angeles, London Heathrow, Minneapolis-St Paul, New York-JFK, Paris-CDG, Salt Lake City and Seattle.

It also means that frequent flyer points will be exchangeable across all Virgin and Air France-KLM operated flights, in addition to Delta, which will retain its 49 per cent state in Virgin Atlantic.

Virgin will hang on to a 20 per cent stake, and the Chairmanship, as well as its independence as a UK airline with a UK operating certificate, and will continue to fly under the Virgin brand. So this does not spell the end of those red uniforms.

As for a kiss and makeup session between Branson and Walsh? Don't hold your breath.

The Telegraph, London

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