Branson squares up to Walsh in European battle

Virgin Atlantic poised to appeal the EU decision to allow IAG's purchase of Bmi to pass so easily

Sir Richard Branson and Willie Walsh are set to renew hostilities as Virgin Atlantic launches a legal challenge to the EU decision to wave through International Airlines Group's acquisition of Bmi.

The British Airways owner bought Bmi from Lufthansa for a knock-down £90m back in April, but Virgin will submit a formal appeal to European authorities within the next fortnight or three weeks.

Sir Richard is angry that the deal went through the anti-trust process so quickly – just 35 working days – given that it resulted in IAG having over half all take-off and landing slots at Heathrow.

The appeal process is expected to take up to two years. Virgin Atlantic will push for stronger measures, or "remedies", to ensure competition than were introduced earlier this year. Prior to the deal, IAG had 43 per cent of Heathrow's slots.

IAG ended up handing over 14 slots, which Virgin branded as "derisory" as it represented only a quarter of Bmi's Heathrow network. Virgin is going to point to Manchester airport, which was deemed to have no competition issues in the original findings, as it believes that the European Commission placed too much emphasis on train links offering passengers an alternative form of transport.

An industry source said: "It looked as if the competition authorities just completely missed out the impact on Manchester. There were 14 pairs of remedy slots which it is tempting to split among several carriers, but BA needs a strong rival."

Steve Ridgway, the chief executive at Virgin Atlantic, told The Independent on Sunday: "I can confirm that we are going ahead with our appeal and that we are preparing it now."

Mr Walsh has often been publicly critical of Sir Richard. Earlier this year, Mr Walsh told the London Evening Standard that Sir Richard's opinions were " largely irrelevant" after the serial entrepreneur argued the deal would "cut consumer choice and screw the travelling public".

Their feud dates back to 2006, when a tip-off from Virgin resulted in US and UK competition authorities investigating BA for alleged price-fixing. As a whistleblower, Virgin was not fined for its role in the scandal while BA was penalised £271.5m.

Mr Walsh said of Sir Richard after that incident that he "wouldn't forgive anybody for what they did there" and went on to say that they did not like each other. However, the pair have only met on a handful of occasions.

Landing slots are hugely valuable to airlines and, paired with take-off slots, are thought to be worth up to £10m each. IAG even tried issuing bonds against up to 31 Heathrow slots, though this process was abandoned on Friday.

Originally, IAG was going to pay £172.5m for Bmi, but it is thought that this was slashed by more than half as compensation after Lufthansa failed to sell loss-making units Bmi baby and Bmi regional. Those units were not included in the terms of the original deal.

Potted history

1919 BA forerunner Aircraft Transport and Travel launches the first daily international scheduled service

1984 The then plain Richard Branson announced plans to launch Virgin Atlantic

1993 BA apologises "unreservedly" to Virgin after waging an alleged dirty tricks campaign against its growing rival

1999 A 49 per cent stake in Virgin was sold to Singapore Airlines, valuing the company at more than £1.2bn

2011 BA completes merger with Iberia. forming Europe's second biggest airline by market value

2012 Virgin challenges IAG's takeover of Bmi