VIRGIN seems to survive without a shorthaul network to feed its routes, so would LGW longhaul also limp on without the B737-400's. Inevitably, shorthaul is all but finished at LGW.
Virgin can't even make ORD work all year round and they have a significant frequency disadvantage against BA on other routes. BA short-haul "tops up" London O&D traffic to support high frequencies that business customers value and provides top-up when London demand is soft and when there are currency advantages from sales outside the UK.
The pathological obsession with Walsh is a misnomer.
IAG is spending up to £170m of its shareholders' money buying a business (which thanks to the restructuring of BA under WW and the IB merger it is able to do so from its own cash reserves without, like Virgin, having to find external financing which is in very short supply at the moment) that is bleeding red ink and has cost its current owner close to £1bn in acquisition costs and losses.
It is axiomatic to anyone with a shred of of business acumen that you can't turn around a loss making business if by integrating it into the acquirer you immediately inflate the cost base. Whilst bmi slots will ultimately be used to grow long-haul this will be a gradual process that over years not months, so bmi's network will, to a large extent, continue as it is for some time.
It is business. Nothing to do with personal agendas etc.