Branson predicts "spectacular" airline casualties

LONDON (Reuters) - There will be “spectacular casualties” in the airline industry over the next 12 months, billionaire Richard Branson, the owner of Britain’s No. 2 long-haul airline Virgin Atlantic, was quoted as saying on Saturday.

In this file photo Virgin founder and chairman Richard Branson speaks during a keynote address at the CTIA Wireless convention in Las Vegas, Nevada April 1, 2008. Branson predicts there will be "spectacular casualties" in the airline industry over the next 12 months. REUTERS/Steve Marcus

The U.S. airline industry -- including Virgin America -- has been battered by soaring fuel costs that are pinching even the healthiest airlines.

“The financial state of the world is just about the worst I’ve ever known it,” Branson told The Times newspaper in an interview. “It’s getting perilously close to being worse than the 1990s.

“You have the perfect storm -- you’ve not only got the banking crisis and the housing crisis, you’ve got the soaring fuel prices as well. One of the big American carriers will almost definitely go.”

Branson confirmed Virgin was interested in buying British airline bmi, 50 percent plus one share owned by entrepreneur Sir Michael Bishop.

The carrier has long been expected to change ownership in 2009 due to a private agreement between Bishop and 30 percent minus one share co-owner Lufthansa.

Despite barely making a profit in 2007 -- and with the outlook far worse for 2008 -- bmi’s value is in its control of 11 percent of the highly prized airline slots at Heathrow.

The billionaire also called for an end to BAA’s monopoly of Britain’s major airports.

Part of Spain’s Ferrovial since 2006, BAA has owned the three main airports serving London -- Heathrow, Gatwick and Stansted -- as well as Scotland’s Edinburgh and Glasgow airports since it floated over 20 years ago.

“It’s been embarrassing to be British looking at foreigners queuing up to come into the country,” said Branson.

“I certainly think that BAA should be broken up. Each individual terminal at Heathrow should be privatised so they can compete against each other. BAA just creams off more and more every year.”

Britain’s Competition Commission is investigating whether problems faced by airline travellers through Britain, as highlighted by the chequered opening of Heathrow’s Terminal 5, are caused or exacerbated by BAA’s monopoly.


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