Gardner and Tait. Neither was enthusiastic. Gardner saw Fields’s approach to such an unconventional figure as proof of his lack of understanding of the airline industry. Tait, who had been living in the United States for some time, had never heard of Branson; but he knew that Virgin Atlantic was a crazy name.
As the public hearing approached, Fields became worried that Branson’s lawyers, Harbottle & Lewis, were proving slow to produce a draft contract. He wanted the affair settled; Branson’s signature would be accompanied by a cash influx into the business that would help to restore his dwindling pot of savings. Each successive letter from Fields’s own lawyers about the agreement seemed to include a demand for money more urgent than the last.
On 29 February the two men appeared at a press conference at Maxim’s Restaurant to announce the launch of the new Virgin Atlantic Airways. It was Branson’s name that appeared in the following day’s newspapers, promising to undercut People Express, and declaring his conviction that at least 250,000 British citizens would fly to New York if only the ticket price were low enough. What the assembled journalists did not know, however, was that Branson was not a director of the company. Nor did he hold any of its shares; while his handshake with Fields a fortnight earlier had yet to be formalized, he in fact held no legal interest in the venture at all.
As the toughness of Virgin’s demands was spelled out in detail, Fields’s lawyers became suspicious. They were concerned when Branson demanded that Fields himself should give personal guarantees for the debts of the airline – thus risking being made bankrupt and losing everything he owned if it failed. (There was no suggestion that Branson should do the same.) They also warned Fields in writing that Virgin would ‘be able to control an important function of the company,’ and expressed ‘very grave doubts about the wisdom of the press conference held today.’
Undaunted by these cautions, Fields went off to the Civil Aviation Authority on 1 March to argue his case. The public hearing started inauspiciously. The three-man CAA panel, familiar with his style from earlier appearances, was irritated to discover that Fields had decided to make an impassioned speech himself instead of allowing the lawyer employed by his company to present the case in more measured terms. ‘A man who acts as his own advocate has a fool for a client,’ recalled one of the panel members later. It was not only the panel who were unimpressed: after hearing a report on the first day of the hearing from Colin Howes, his lawyer from Harbottle & Lewis, Branson also decided to come and speak on the second day. His presence soothed the panellists: although none of them had ever heard of Branson before – and were at first bewildered to find this unfamiliar presence from the music business invading their world of dark suits – the Virgin chairman’s answers were convincing, and refreshingly to the point.
The question at issue was straightforward. British Caledonian Airways, which had been forced to wait a dozen years to acquire its own first transatlantic route, was determined to prevent an upstart like the new Virgin Atlantic from winning one in as many months. Specifically, BCal pointed out that it already had permission to fly passengers between Gatwick and JFK from 1985 onwards, and complained that if Virgin Atlantic were allowed a head start in operating the Newark route, the profitability of its own forthcoming flights would be put at risk. Since BCal had shown no great enthusiasm for the competitive North Atlantic run in the 1970s when it had the chance, this argument did not impress the panel. The CAA therefore seized on a detail of Virgin Atlantic’s proposal – that it would run a scheduled daily service in summer, but might fly less frequently in winter if there were not enough passengers – and decided that the new airline counted as a sort of honorary charter airline. Since BCal had said that it would not oppose a charter service, concluded the CAA’s written response triumphantly, Virgin Atlantic’s application should therefore be granted. There was one condition: the airline was given a month to satisfy the bureaucrats that it was ‘financially fit’ to fly.
Until Virgin had a shareholding in the airline, it would not be in a position to make any formal promises to the Authority about underwriting the new venture. Fields had hoped that the contracts would be wrapped up within a matter of hours or days of the 29 February press conference. But, as the end of March approached, the draft agreement did not appear. The night before the two men were due to visit Clifford Paice, the CAA official in charge of financial vetting, Harbottle & Lewis had still not produced the paperwork. It was only by having the papers rushed round for signature at 10 AM on the day of the meeting that the two men were able to answer the CAA’s financial inquiries as formal partners. In accordance with the deal they had shaken hands on, the two partners would have 45 per cent of the equity each, with the airline’s founding employees holding the balance. Each side would have the right to appoint two directors to the company’s board, though Branson would not at first be one. Day-to-day control of the business would stay in the hands of Randolph Fields, who would receive the title of chairman. His employment contract gave him thirty working days’ holiday each year, a car ‘of suitable standard for his business and private use’, but no salary. Instead, Fields was to be paid £25,000 out of the first £1m that the airline made in profits, and five per cent of whatever profits it made after that.
With the helpful publicity generated by the newspapers, it had been a relatively easy matter to argue in the public hearings that a new carrier between Gatwick and Newark would help bring low-cost transatlantic travel to the masses, and would give a British business a chance to compete on a route dominated by People Express of the United States. But the financial experts at the CAA proved harder to please. Refusing to accept Fields’s most pessimistic scenario, they started from the assumption that the airline would lose money heavily for most of its first year of operation, and demanded that £3m be injected into the company, either as share capital or as a loan from another Virgin company, to cover that eventuality. Under protests from both Branson and Fields, it relented. The airline need not come up with cash, said Paice; instead, the Authority would be happy to accept Richard Branson’s offer for Virgin to guarantee whatever losses the airline might sustain.
This was not surprising to Fields, for he knew how conservative a view the Authority was apt to take of airline financing. What shocked him was Branson’s reaction to the CAA meeting when they met back on his houseboat that afternoon. Without preliminaries, Branson told Fields that the contract they had signed that morning would have to be torn up.
‘My 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
