The Virgin Atlantic brand could could soon be consigned to the history books, British Airways (Other OTC: BABAF.PK - news) and Iberia (Madrid: IBLA.MC - news) boss Willie Walsh has suggested, with Sir Richard Branson’s UK carrier set to become the latest name to be swept up in the wave of aviation consolidation.
Mr Walsh said the Virgin Atlantic name will likely be scrapped by US giant Delta (BSE: DELTACORP.BO - news) , which is in talks to buy a 49pc stake in the UK carrier from Singapore Airlines (SES: C6L.SI - news) . It is believed negotiations could come to a head as early as this week.
Delta’s European partners Air France (Paris: FR0000031122 - news) -KLM are subsequently expected to buy part of Sir Richard’s 51pc holding in the trans-Atlantic (Frankfurt: 640218.F - news) airline he set up in 1984.
Willie Walsh, head of International Airlines Group, argued Delta’s main interest in Virgin will be the UK carrier’s prized Heathrow take-off and landing slots.
“I can’t see Delta wanting to operate the Virgin brand because if they do what does that say about the Delta brand?" Mr Walsh said. “Delta believe they are the number one airline in the world, so what they would want to do is acquire the slots at Heathrow to enable them to have a strong presence at Heathrow.”
Fears over the death of the respected Virgin Atlantic brand could overshadow the unveiling of its short-haul business on Monday.
Mr Walsh believes Virgin’s future is reliant upon a deal with a new investor such as Delta as it needs to “reinvigorate” itself.
The chief executive of IAG stoked old rivalries with Virgin as BA made a return to South Korea for the first time in 14 years, launching a route between Heathrow and Seoul.
IAG is facing major consolidation challenges of its own as Spanish unions prepare to strike this week over plans to scrap 4,500 jobs at Iberia .
Mr Walsh slammed the strike action as “mad” and stressed it will not deter him from restructuring the ailing Spanish flag carrier, which is hemorrhaging €1.7m (£1.4m) of cash a day.
His criticism was not confined to Spanish unions, however. The businessman, one of the most influential in Britain, also cast a vote of no confidence on Chancellor George Osborne’s latest efforts to revive the UK’s moribund economy.
Many of the Government’s policies are making the UK “less competitive rather than more competitive”, the aviation veteran said.
Britain is in danger of becoming an economic backwater due to its “unfriendly” visa system, inertia over airport capacity and taxes such as Air Passenger Duty, which has risen 360pc since 2006, he claimed.
Mr Walsh warned the UK was stuck in an “old world”, relying on exports to declining markets in Europe (Chicago Options: ^REURUSD - news) , and does not have good enough connections to fast-growth economies.
“2011 was the first year exports to the Brics [Brazil, Russia, India and China] combined exceeded exports to Ireland (Xetra: A0Q8L3 - news) , that’s not right,” the airline chief said. “You can’t say that we have got a focus in the right areas if we are still so highly dependent on a number of our EU trading partners.”
When asked if he thought the Chancellor was doing enough to boost British business following last week's Autumn Statement , he replied: “My view is he isn’t.”
In a characteristically bullish interview, Mr Walsh also waded into the debate over foreign companies paying corporation tax in the UK. The Irishman, who lives in Twickenham, West London, said he has always avoided Starbucks’ coffee but he would consider going back to the chain to buy his favourite Rocky Road snack bars, after the US giant agreed to pay £20m in UK corporation tax .
Mr Walsh said some of the debate about UK corporation tax had been “presented in a way that isn’t correct” as companies pay tax on profits, not revenue. But he added: “I think the fact Starbucks (NasdaqGS: SBUX - news) has come out and said we are going to pay £20m sort of suggests to you it [the campaign] has had an impact.”
Delta did not reply to calls for comment. Virgin declined to comment.