Virgin King (Text Only). Tim Jackson
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bankers won’t let me do it,’ said Branson. ‘Unless we control the company, we’ll have to walk away from this deal.’
Fields was crushed. He had come so close to realizing his dream; it would be cruel indeed if the prize were to elude him at the last minute. Recovering his dignity, he told Branson that he refused to be squeezed, and immediately left the boat with his lawyer to return to his chambers at Gray’s Inn.
‘Don’t worry,’ said the lawyer on the way back. ‘He’ll call you within twenty minutes of our return.’ When the two arrived, Branson had already left three messages. He was more malleable when Fields returned his call.
‘All right, Randolph,’ he said. ‘You win.’ But he was concerned that his attempt to renegotiate their earlier agreement should not sour the relationship. ‘It wasn’t me,’ he explained. ‘It was the bankers. I didn’t want to do this to you. I was forced into it.’
Fields slept more soundly that night than he had done for months. The next morning, however, Branson was back on the telephone, harking back to the issue that Fields thought had now at last been settled. Once again he was demanding a greater share of the equity, and pleading that his advisers would not allow him to continue to support the CAA application on the terms they had agreed.
‘Dear Randolph,’ he wrote in a letter on 26 March.
Please put yourself in my position. We have now been asked to give both unlimited guarantees to the CAA and to commit ourselves to Boeing for $13m [for the 747 whose lease they were negotiating] at a risk to us of $3,241,000. Furthermore – tomorrow – we have to outlay a considerable nonreturnable deposit. Unless we go with Boeing tomorrow, I don’t see this venture getting off the ground in time for the summer.
I genuinely didn’t want to reopen negotiations. But – with the massive extra risk that we are having to incur – it would be irresponsible for me not to … If you want us to work together and for us to give this venture the 100% support it needs, it has to be on terms we feel comparatively comfortable with. At the moment, we feel very uncomfortable.
Fields retorted that Branson’s demands were quite unreasonable, since he had known at the outset the risks that would have to be taken on. Yet still the pressure did not let up. On 2 April, just before the final meeting with the CAA at which the capital requirements were to be formally settled, Branson wrote to him once again – this time a rambling letter composed in the early hours of the morning.
Dear Randolph
Since I am having difficulty sleeping, I need to put my thoughts down on paper since tomorrow morning will be make or break day for the airline. I desperately need you to understand before everything is lost … Neither of us are [sic] holding a gun to the other’s head. Either one of us could throw everything away tomorrow. And I believe that if either of us applied to the CAA later, the chance of success another time (after what will be seen as something of a fiasco) will be nil.
Two days later, Fields gave in. He signed away majority control of the airline to Virgin, in return for a £200,000 cash payment to cover the investment he had already put in. The employees who owned what might have been a controlling 10 per cent stake were faced with a fait accompli. They might not have succeeded in blocking the new deal even if they had wanted to; and had they tried, Branson’s withdrawal from the CAA application would have reduced the value of their shares almost to nil in any case. Roy Gardner, who had served Laker for years without receiving a single share, allowed his two per cent stake in Virgin Atlantic to be bought out without a murmur of protest. ‘I thought it over for about five minutes, and then decided to stay with the company,’ he later recalled.
Fields signed because he knew that Branson had him in a stranglehold. Without the Virgin guarantee, the airline would have no chance of starting operations in 1984. If he wanted to run an airline, it must be on Virgin’s terms. After all, what hold had Fields himself over Branson? He had come up with the idea in the first place, and brought it to the houseboat; but now that Branson was aware of the opportunity, it was no longer of any value. Fields had done a great deal of work estimating traffic flows and had a detailed business plan – but Virgin had enough accountants to produce business plans of its own. He had identified a second-hand aircraft, and had thoughtfully sent Branson a model on which the Air Canada red stripe down the fuselage was left intact but the Virgin name was painted on the tail; but there were plenty of other 747s that would serve the purpose just as well. He had a team of good people, salvaged from the Laker wreck; but talented employees could easily be lured away. His only asset was a licence application that was nearing regulatory approval – in the name of Ritter PLC, Fields’s holding company.
What Fields did not know, though, was that Branson had already made a discreet approach to Clifford Paice at the CAA to find out what the Authority would think of an application that did not carry the name of Randolph Fields. Had the regulators been willing for Branson to proceed without his partner, Virgin might have been able to start an airline of which it owned 100 per cent, rather than just 75 per cent, and to run it exactly as it wished. But the message that came back to Branson was politely discouraging. Although he was as welcome to apply for permission to fly a route as anyone else – and would have a good chance of succeeding, given the assets that he was able to bring with him – he could expect no special treatment. The application would have to be officially published by the CAA; other airlines would have the right to object, as they had done to the Fields application, and there would have to be another public hearing, and another investigation into financial fitness. If Branson wanted to part company from Fields, he should give up hope of flying any passengers in 1984.
While there was still a chance that he might be allowed to ditch his business partner, Branson had an incentive to postpone the signature of the shareholders’ agreement. Once he understood that he and Fields were in it together, however, there was no point in further delay. The contracts could be signed, and it was up to Branson to secure as much of Ritter PLC for himself as he could. By increasing his shareholding from 45 to 75 per cent in less than a fortnight, he had certainly made a good start.
For his part, Fields was no more than dimly aware of these calculations. He believed himself still to be secure. He knew that Branson now had a controlling stake in the business, but his minority shareholding still gave him significant protection under British company law; and his position as chairman of the airline, with executive control of its daily management, seemed unassailable. Virgin Atlantic’s board, he had agreed with Branson, would be made up of four directors, two nominated by Fields himself and the other two by Virgin. Only if it had reason to be concerned about the firm’s management or its finances would Virgin have the right under the agreement to appoint a fifth director.
‘’ALLO,’ SAID ROD VICKERY.
The man in the suit looked up from his desk, and threw a critical glance at Vickery’s long hair. His eye took in the earring and moved down over the open-necked casual shirt, the jeans, and the highly polished cowboy boots.
‘Hello,’ he replied tentatively, ‘I’m Don Cruickshank, the new MD. And you are?’
Vickery explained quickly that he was in charge of the company’s car fleet, and dealt with its insurance and its property holdings. He had heard that this was Don’s first day, he said, and since their offices were next door to each other, thought he should come and introduce himself.
They made an odd pair, wandering around the cramped Virgin offices in Ladbroke Grove. Vickery was the cockney wide-boy, affectionately known inside the company as Virgin’s Arthur Daley, the man who used to tease the public schoolboys close to Richard Branson by pretending that he had graduated from Oxford University instead of Twickenham Art School. Cruickshank, his new neighbour, was fastidious, cerebral, and quietly spoken – and had ‘management consultant’ written all over him. Yet it was Cruickshank, not Vickery, who was the odd man out. Why, wondered the people Vickery introduced