Branson eyes Virgin Atlantic merger

Branson eyes Virgin Atlantic merger

Sir Richard Branson has hinted that merging Virgin Atlantic with another carrier might be the only way to allow his airline to compete with the likes of United, Lufthansa and British Airways.

The billionaire made the comment whilst onboard the inaugural Virgin flight from London to Ghana in West Africa.

He said that the airline might not be able to remain independent due to the speed of consolidation within the industry.

Virgin’s bitter rival British Airways is merging with Iberia, and is expected to ink a transatlantic tie-up with American Airlines within days. Meanwhile Continental and United are negotiating a merger that will create the world’s largest airline.

Sir Richard told The Times: “If it becomes impossible for us to remain an independent airline and survive, we may come to a situation where we have to consolidate.”

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He is also continuing his campaign against the BA and American Airlines tie-up and has threatened legal action.

“We may have to resort to the courts to overturn the regulatory approval for this alliance,” he said.

Singapore Airlines is understood to be keen to offload its 49-percent stake in Virgin Atlantic is 49 per cent-owned by Singapore Airlines. This would increase the possibility of a deal with another carrier. Sir Richard has hinted his preference to partner with bmi, although this is off limits till Lufthansa completes a restructure of the British carrier.

But in the short term, Virgin is benefiting from the strike disruptions at BA. Virgin’s business passenger numbers are up 10 per cent since BA cabin crew voted for industrial action in March, and it has experienced a similar boost in economy class.

Load factors are expected to be nearly 90 per cent in economy during May and June as passengers shun BA flights.

He added: “They are shooting themselves in the foot. A lot of BA travellers who have never travelled with us are trying Virgin Atlantic. I think they have done long-term damage to their business, as well as short-term harm from the cost of the strikes.”

The Virgin founder also criticised a proposal to change air passenger duty from a per person calculation to per plane. He said this would push transfer passengers to other European airports, making it harder for British airlines to operate long-haul services.