Let's set the record straight from the get-go, this article in yesterday's Sunday Times is pure speculation - there have been no comments from VS, Heathrow, or anyone else about these claims. But it sure is fun to gossip.
The "announcement" comes at a time when Virgin is undergoing a top-to-bottom strategic review, lead by new CEO Craig Kreeger. Kreeger has already proven himself to be a no-nonsense leader, forging a deal with Delta, cutting underperforming routes, and shifting the carrier's strategy to trans-Atlantic routes. So if this announcement turns out to be true then it wouldn't be a huge surprise, but there's a lot more at stake than pure passenger numbers. Little Red was started because VS were awarded LHR slots as part of the BA-BMI deal. One of the stipulations of those slots being awarded was route restriction, and those restrictions have several years before they expire so it would be foolish for Virgin to hand them back to BA. I don't think we've heard the last of this story.