Virgin Atlantic to Merge?

Virgin AtlanticThrowing a twist into Europe's airline industry, Reuters is reporting that Virgin Atlantic may merge with another carrier if the British Airways/American Airlines merger goes through.

According to the article, Virgin Atlantic owner Richard Branson has said that a BA-American Airlines tie-up would be anti-competitive and drive airfares up, but analysts have said Virgin will have little choice but to look for a partner if other mergers are approved.

The U.S. Department of Transportation (DOT) recently gave tentative approval to grant antitrust immunity to BA and American's planned commercial alliance, which will allow the pair to cut staff and pricing costs as well as combine routes.

Earlier this month, UAL Corp's United Airlines and Continental Airlines agreed to combine, while Air France-KLM and U.S. carrier Delta have been operating as one airline over the North Atlantic for around a year.

BA expects its $8 billion merger with Spain's Iberia to be complete by the end of 2010 and hopes a three-way alliance with American will generate $7.15 billion of sales annually.