Leadership

When Richard Branson's airline won $945,000 from a lawsuit, he gave it all to his employees

Richard Branson started Virgin Atlantic in 1984
Etienne DE MALGLAIVE | Getty Images
Richard Branson started Virgin Atlantic in 1984

Billionaire entrepreneur Richard Branson started his airline Virgin Atlantic in 1984 when his flight from Puerto Rico to the Virgin Islands was cancelled.

Rather than waiting for the next available flight, "I hired a plane, borrowed a blackboard and as a joke, I wrote 'Virgin Airlines' on the top of the blackboard, '$39 one way to BVI,'" he says in a video by HP Matter. "I went out to round up all the passengers who had been bumped and I filled up my first plane."

Three decades after after its launch, Virgin Atlantic is the second-largest UK carrier. "But it hasn't always been easy ... during those 33 years," the founder writes in a letter to his employees.

Most notably, when Branson's airline was trying to establish itself in the 1990s, British Airways ran what became known as the "dirty tricks" campaign.

"We had about four planes flying, and [British Airways] went to extraordinary lengths to put us out of business," recalls Branson on an episode of NPR's "How I Built This" podcast. "They had a team of people illegally accessing our computer information and ringing up our passengers and pretending that they were from Virgin, telling them that flights were cancelled and switching them onto BA."

Virgin took British Air to court and won $945,000 in damages, the largest libel settlement in UK history. Branson chose to invest the money back into his Virgin Atlantic team.

"It was Christmas time," he tells Raz. "It became known as the BA Christmas bonus — we distributed it to all our staff equally."

After all, the Virgin Group founder credits the success of his hundreds of companies to his employees: "The fundamental driver of our success at Virgin has, and will always be, our people working together. To be successful in business, and in life, you need to connect and collaborate."

If Branson had to fly with BA today, he would, he tells Raz. Though, he adds, "I might get the neighbor next door to taste the food first."

Like this story? Like CNBC Make It on Facebook.

Don't miss: How handing out $500 checks to 448 employees helped keep one company from going under