He said yesterday that the long haul carrier, which is already 49 per cent owned by Singapore Airlines, may need to come to a “situation where it would have to consolidate in order to survive”.
Virgin Atlantic said it is keeping a close eye on whether a trans-Atlantic tie-in between BA and American Airlines (AA) gets the green light from US competition regulators.
It said: “[A merger] would be one possibility if the British Airways and American Airlines [merger] was given the go ahead.”
The US Department of Transport has already given BA and AA tentative approval of the proposed merger, which will see the two airlines share a number of airport slots and combined routes.
Branson’s comments come as a number of airlines have merged this year, including rivals British Airways (BA), which finalised its $8bn (£5.5bn) merger agreements with Spanish carrier Iberia early last month. Similarly, United Airlines and Continental Airlines announced intentions to merge earlier this month.