As far as I am aware the reason was never made public. Virgin were trying desperatley in early 2004, when the RAF knew that they could not keep up the Falklands flights on top of the trips to the Gulf.
They refused Virgins offer, then gave the contract to BMI on their A330's for a few month, before Air Atlantic got the contract for their 747, which I believe is the oldest flying pax fit 747 in the world.
Not sure who has the contract now, but whoever it is, use a shed of a DC10