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Branson: Virgin, Lufthansa To Discuss Cooperation

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PARIS — Virgin Atlantic boss Richard Branson said Tuesday his airline will discuss a possible cooperation deal with Lufthansa _ even as he slammed British Airways for seeking what he called anticompetitive, "unholy" alliances with other major airlines.

"Talks will take place with Lufthansa, maybe are taking place, to see whether it makes sense for the two companies to work together," specifically with Lufthansa-controlled BMI British Midland airlines, Branson told The Associated Press in Paris.

Speaking on the sidelines of a nuclear disarmament event, Branson would not give any details about the content or timing of the Virgin-Lufthansa talks but said, "There is some logic in the two companies getting together."

BMI said in October that Lufthansa is taking control of the airline with an 80 percent stake. That will give the German carrier a much greater presence at London's Heathrow airport, Europe's largest and the key hub used by North Americans coming into Europe.

Branson said Virgin's involvement with BMI "would make us a stronger competitor to British Airways than we are today." He said "British Midland and Virgin do not overlap on any routes whatsoever."

The Lufthansa-BMI deal, which would give Lufthansa a strong position amid industry consolidation in Europe, is expected to be completed by Jan. 12 pending regulatory approval.

Lufthansa would not comment directly on possible talks with Virgin.

Branson also urged regulators to block bids by British Airways PLC to merge or cooperate with Australia's Qantas Airways Ltd, Spain's Iberia SA and American Airlines.

"The four carriers that are trying to merge are all financially sound. They should be told to get out and compete in the interests of the consumer and not be given the grant to collude," Branson said.

"We will fight very hard to try to stop these unholy alliances from taking place," he said.

"I would urge governments to beware of companies who use what is going to be a temporary financial crisis to try to bring about mergers that would be against the public interest," he said.

BA and Qantas said last week they are holding talks about a potential merger. BA is already pursuing a revenue-sharing deal with American Airlines and Iberia.

BA's chief executive Willie Walsh has long advocated industry consolidation, arguing that closer cooperation will help airlines cut costs in the current difficult economic climate.

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AP Business Writer George Frey in Frankfurt contributed to this report.