I can't think for one minute that AF or LH have any notion of running UK domestic flights. This is about slots - and was the reason for Virgin's interest in Flybe 1 at LHR. Get hold of these remedy slots - AF/KL can use them to backfill on their short-haul services and free up their own unrestricted slots to provide more expansion at LHR.
Lufthansa is in the running to acquire ITA which, as the Daily Telegraph article correctly pointed out, now has no LHR slots. A certain Abu Dhabi-based airline has leased out its spare LHR slots to anyone but ITA this year, so ITA has plans to fly to LHR but no slots whatsoever. A minor technical snag.