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Virgin Atlantic is scrapping its Little Red domestic service next year – just two years after it was launched.

The British airline said on Monday that Little Red's short-haul flights between London Heathrow and Manchester, Edinburgh and Aberdeen will end because the subsidiary was not making a 'positive contribution' to the company.

The Crawley-based carrier, co-owned by Sir Richard Branson and Delta Air Lines, said the decision followed a review of its network which has put a new emphasis on its transatlantic routes.

Sir Richard Branson flashed his underpants when Little Red's inaugural flight arrived in Edinburgh in 2013

Little Red will stop flying between London Heathrow and Manchester in March while its flights between Heathrow and Edinburgh and Aberdeen will stop in September.

It was set up to act as a feeder to Virgin's transatlantic and international routes, but the airline said it did not provide enough traffic. 

Virgin Atlantic chief executive Craig Kreeger blamed the subsidiary's demise on the 'inadequate' number of runway slots made available by regulators.

He said: 'While this challenged environment meant Little Red ultimately did not deliver the results we had hoped, this certainly will not dampen our enthusiasm to try new things in the future.'

The airline also announced that it is on track to make a profit by the end of 2014 after two years of losses.

Grounded: Little Red will stop flying between London and Manchester, Edinburgh and Aberdeen next year

Little Red launched in March 2013 after Virgin acquired Heathrow runway slots that became available after arch rival British Airways' acquisition of short-haul carrier bmi. It operates single-class flights with Airbus A320 aircraft wet leased from Aer Lingus

Mr Branson famously lifted his kilt and flashed his underpants when the inaugural flight arrived in Edinburgh from London that month. 

Monday's announcement comes less than a week after Willie Walsh, chief executive of British Airways' parent company International Airlines Group, reignited his feud with Mr Branson.

Mr Walsh called Little Red a 'mistake' and told the Telegraph that he is 'delighted' that the domestic airline is struggling to fill its flights.