Mr Branson's expected involvement in Dan-Air is part of an estimated pounds 25m refinancing planned by Davies & Newman to stem a massive cash outflow ahead of the peak holiday season next year.
The two airlines are currently in talks to save Dan-Air, with a total workforce of 2,350, from collapse. The negotiations are aimed at setting up joint marketing and operations, including a possible renaming of Dan Air's services incorporating the Virgin brand.
In addition, they are examining ways of co-ordinating their ticketing and passenger routing networks. But there is no intention to merge the two airlines.
While Virgin Atlantic caters for long-haul passengers, Dan-Air has an extensive European airline route network.
David James, the company doctor who heads Davies & Newman, said yesterday that the group was planning a fresh call on shareholders to meet a substantial cash shortfall next year.
However, he denied that the company was under pressure from the Civil Aviation Authority, the industry watchdog, to raise new funds within the next few days. Nor was there any imminent danger that the company would collapse.
'Our cash position is good. in the past two weeks, it has fluctuated between a pounds 4m draw-down on bank borrowings and a pounds 3m surplus.
'The reason for fund-raising is that we need money during the peak months in April and May due to seasonal factors.'
He added that the rights issue plan was well advanced when Mr Branson restarted detailed negotiations last Thursday. If successful, the talks would lead to Mr Branson participating in the capital injection.
Davies & Newman has asked the Stock Exchange to suspend dealings in its shares from today, pending further news of the talks. Any proposal would depend on approval by its shareholders and other investors.
The company has undergone two previous refinancings. Last year it was saved from collapse by a pounds 50m share issue. It reported a taxable loss of pounds 35m for 1991 and is expected by City analysts to make a pounds 7m loss this year, compared with a pounds 20m profit forecast at the time of the refinancing.
D&N shares have slumped from a peak of 550p about two years ago, to 23p last Friday.
Despite uncertainty about its future, Dan-Air is continuing to operate its flights normally. But a link-up with Virgin could lead to substantial redundancies among its workforce. It employs about 1,800 as air and cabin crew with the remainder comprising ground handlers and adminstrative staff.
Peter Ryan, deputy chairman of Davies & Newman, is a board member of eight quoted companies, the highest number of directorships held by one person from the UK quoted sector, according to a survey by Director magazine.
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