RICHARD BRANSON is well on the road to achieving his ambition to

become a major player in the UK air industry.

He already has a high profile through his growing Virgin Atlantic

Airways business which looks set to increase even further following the

weekend disclosure that he is in rescue negotiations with Davies &

Newman, parent company of Dan-Air, Britain's oldest independent airline.

Dan-Air shares were suspended yesterday at 23p compared with a peak of

550p two years ago.

At the moment there are no plans to merge Dan-Air with Virgin

Atlantic. The talks are aimed at co-ordinating the marketing and

operational activities of the two airlines as part of a #20m-#25m

fund-raising package by Davies & Newman.

Dan-Air's banks, led by Lloyds Bank, are unhappy about the prospect of

having to inject more money into the airline given the small likelihood

of any profits and the proximity to last year's #53m rights issue.

Dan-Air lost #35m in 1991 and further losses of around #7m are

expected this year. The deal with Virgin is expected to be finalised

within the next fortnight and is thought likely to persuade large

investors such as Mercury to provide funds. One of Dan-Air's most

valuable assets are its Gatwick operations and the landing slots at

Britain's second-busiest passenger airport.

If Mr Branson succeeds in integrating Dan-Air's European operations

into Virgin's existing long-haul business, it will enable him to become

an even more formidable opponent to Lord King's British Airways.

It is just eight years since Mr Branson created Virgin Atlantic

Airways, against the better judgment of his closest colleagues and

Coutts bank who were concerned that it would eat into the hard-earned

profits of the music business. However, in that time it has achieved a

reputation for good-quality service, notably to the USA which has made

it more of a threat to the larger-established players such as British

Airways and the American carriers, than its size alone would suggest.

The aim of the airline is to create a unique value-added service

providing only two classes, upper and economy class, which respectively

offer a higher standard of service, often at a lower price than

competitors. Virgin Atlantic currently flies Boeing 747s to New York,

Miami, Orlando, Los Angeles, Boston, and Tokyo. It is awaiting landing

slots to fly from Heathrow to South Africa, Singapore, Australia, and

other US destinations.

Building up Virgin Atlantic Airways is the main challenge facing

Richard Branson following the sale of the Virgin Music Group to Thorn

EMI for #510m cash in March. As the world's largest independent record

company, Virgin had artistes such as the Rolling Stones, Phil Collins,

and Bryan Ferry on its books.

Mr Branson received about #380m from the deal, but he made his first

million almost 20 years ago following the signing of Mike Oldfield and

the subsequent success of his ''Tubular Bells'' released in 1973.

Mr Branson has come a long way from the launch of the Student Magazine

in January, 1968, his first business venture, and is now one of the UK's

most successful entrepreneurs. He has not had a totally easy path to

riches, not least the group's short-lived foray from the rock market to

the stock market.

The music, retail and property, and communications divisions of Virgin

Group were floated in November, 1986, on the Stock Exchange. The

airline, clubs, holidays, and aviation services businesses were kept as

part of the privately-owned Voyager Group. However, the City is not

known for its appreciation of those who differ from the straight

pin-striped norm. It failed to appreciate the unorthodox business style

of Richard Branson and the share price suffered accordingly, never

managing to break decisively above the 140p offer price.

Disaffection with his stock market experience prompted Mr Branson to

launch a management buy-out following the stock market crash of 1987.

The 41,000 shareholders accepted the offer of 140p a share, valuing the

group at #248m. The company was delisted from the Stock Exchange and

remains one of the largest private companies in the UK with a worldwide

turnover in excess of #750m.