Virgin Atlantic’s Little Red short-haul operation linking Edinburgh, Aberdeen and Manchester with Heathrow will be “costing a fortune”, according to Willie Walsh, head of British Airway’s parent IAG.

Walsh made the claim while addressing the Capa (Centre for Aviation) Airlines in Transition conference near Dublin yesterday.

Little Red flights are operated by Aer Lingus and Walsh said: “They work for Aer Lingus – it makes a profit. But does it work for Virgin? Absolutely not – it is costing them a fortune.”

Virgin Atlantic established Little Red just over a year ago, venturing into short-haul flying for the first time, after winning control of former BMI slots at Heathrow.

BA had to release the slots following its takeover of BMI, but they can only be used to connect Edinburgh and Aberdeen with Heathrow.

Virgin Atlantic has declined to release figures on traffic on the routes but insists it is happy with the Heathrow connecting traffic they generate.

Aer Lingus chief strategy and planning officer Stephen Kavanagh told the Capa conference: “Virgin Atlantic needed to launch a UK domestic service, but it is not a short-haul operator. They decided to outsource [the routes] on a cost-plus basis.”

Kavanagh insisted: “It works for Virgin. They would never be able to produce a short-haul seat as cheaply as Aer Lingus. Virgin made a pragmatic decision.”

But Walsh declared it “bizarre”. He said: “How can you bid for routes on the basis of providing competition and then say you can’t deliver?”

Asked why BA does not operate more services, including long-haul flights, from Manchester and Edinburgh, Walsh said: “There is no point operating services that are not profitable.

“If we felt we could make money flying long-haul from anywhere outside London we would do it. But demand for premium traffic in Manchester and Edinburgh is tiny compared with Heathrow.”

He said: “There are models that work, models that work for a period of time and models that will never work.

“The idea you can justify having loss-making parts of your business is wrong.”