Entrepreneurs

An old Richard Branson bet may mean a $1.3 million Christmas bonus for Virgin employees

When he was a child, Virgin Group founder Richard Branson's mother made a point of teaching him the value of treating others fairly.

"If I ever said anything ill about somebody as a kid, my mum would send me to the mirror and make me stand there for 10 minutes because she said it reflected so badly on me," Branson tells CNBC Make It.

That part of his upbringing has stuck with Branson and may explain his dedication to a five-year-old bet with a long time rival for £1 million pounds, or about $1.3 million as of Dec. 11.

In the early 1990's, Branson's airline, Virgin Atlantic, was an upstart, one that competitor British Airways tried to quash by way of a series of schemes. That play cost the airline $945,000 in damages it had to pay to Branson in 1993, after he took the company to court.

"We had about four planes flying, and [British Airways] went to extraordinary lengths to put us out of business," Branson says on an episode of NPR's "How I Built This" podcast.

Sir Richard Branson
Getty Images
Sir Richard Branson

Branson took the settlement money and distributed it to his team members at Virgin. "It became known as the British Airways Christmas bonus!" Branson writes on his blog.

But that wasn't the end to the rivalry.

Five years ago Monday, Willie Walsh, CEO of International Airlines Group, the parent company of British Airways, predicted that Branson would have failed in the airline business by now. "Willie Walsh wagered me a very public and painful bet. He bet that the Virgin Atlantic brand would disappear within five years. I disagreed," Branson recalls on his blog.

Walsh's bet came as Delta Air Lines bought a 49 percent stake in Virgin Atlantic Airways, The Guardian reports.

"I responded with what I thought was a good-natured challenge," Branson continues. "If the Virgin brand was still flying, [Walsh] should once again give our Virgin Atlantic team £1 million to share equally as a Christmas bonus. If we were gone, I would give BA's staff £1 million."

Walsh countered that, while losing £1 million wouldn't be equally painful for the two men, given Branson's wealth, a "knee in the groin" would be, The Guardian reported in 2012.

Branson's blog and his statements on Twitter make clear that he thinks he has won the wager.

"Although people might be amused to see me give Willie a low blow, I ideally have no wish to do so," Branson writes. "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."

Walsh disagrees and is disputing Branson's claim.

"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. He's lost the bet," Walsh said in a statement, according to spokesperson for International Airlines Group.

In 2017, Air France-KLM bought a 31 percent stake of Virgin Atlantic, which dropped Branson's stake from 51 percent to 20 percent, the Financial Times reports.

While there might not be a clear winner in this contest, Branson has another offer for Walsh that remains true to his mother's advice: "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."

Like this story? Like CNBC Make It on Facebook!

Don't miss: Billionaire Richard Branson: This skill set is the most critical to achieving success

Video by Andrea Kramar