Virgin Atlantic President Richard Branson said Monday the airline is still interested in U.K. carrier BMI (BMID.YY) should it become available.

Branson said he has always made it clear Virgin would be interested in BMI.

However, Branson said he still believes Deutsche Lufthansa AG (LHA.XE) wants to exercise its option to raise its stake in BMI, and said that should the option be completed, Virgin Atlantic will look to talk to Lufthansa.

Branson said he believes Lufthansa wants to exercise that option. However, Branson said he thinks Lufthansa simply wants BMI Chairman, Michael Bishop, to bear some of the additional costs being faced during the current economic downturn.

Bishop owns 50% plus one share of BMI, while Lufthansa owns 30% minus one share and Scandinavian carrier SAS AB (SAS.SK) owns the remaining 20%.

Lufthansa next year is expected to raise its stake in BMI to 80% after Bishop in October announced that he had exercised a put option that requires Lufthansa to purchase his stake. The German airline has set aside EUR400 million to finance a deal.

That transaction is expect to close by Jan. 12, 2010.

Virgin Atlantic is 51% owned by Richard Branson's Virgin Group (VGN.YY) and 49% by Singapore Airlines Limited (SINGY)

Company Web site:www.virginatlantic.com

-By Kaveri Niththyananthan, Dow Jones Newswires; 4420 7842 9299; kaveri.nithtyananthan@dowjones.com