Whilst you could never say 'never', BA taking over VS seems unlikely for a number of reasons. There are only two shareholders in Virgin Atlantic (a private company): Singapore Airlines (49%) and Richard Branson (51%). While Sir Dickie always has an eye for the main chance, the idea of selling any of his shareholding to BA in anything other than catastrophic circumstances would, I think, be completely unacceptable to him.
As for SQ's shareholding, like a lot of people and companies in 1999/2000, they bought into VS at a time when industrial and financial confidence - in all areas of business - was unrealistically high, as we now know with the benefit of 20/20 hindsight. However, the events of 9/11, and the effect on VS (previously extremely profitable) and the other North Atlantic carriers, were not predictable, so I think it's unreasonable to accuse SQ of bad judgement. Did you or anyone else do so at the time?
For equally unpredictable reasons (Sars), SQ is financially struggling right now, while VS is trading at a small but significant profit (the final figures for 02/03 are likely to show £17m profit on £1.4bn turnover). The outlook for both airlines is extremely good compared to their competitors, and history has shown both to be innovative and fast-acting in securing market share and margins. SQ has deep pockets, and can survive its current troubles. I doubt it has any need to realise a 60%-75% loss (which would be added to its trading loss) on its £600m investment in VS by selling out, when the forecasts suggest that the investment will perform well in the future.
On the regulatory and competition front, I think it's unlikely that BA would be allowed to absorb Virgin (or bmi - the other idea that was floated over the weekend) unless there was some quid pro quo for another, established, European-based Atlantic operator. I doubt that BA, or the British Government, could stomach replacing Virgin at LHR with, say, Air France or Lufthansa. The idea that bmi would be allowed to set up long-haul in place of Virgin is, I'm afraid, laughable unless you happen to be a bmi employee!
There are all sorts of politics surrounding this story, and much of it is fairly impenetrable. Yes, BA needs to get some good press exposure to offset Branson's coups of the last few weeks, but I think the reality is that these are the first few hesitant steps in the dance that will bring a number of European carriers together. While BA, VS and bmi practice their moves against each other, the real targets could be further afield....