Delta Air Lines is buying a 49 percent stake in Virgin Atlantic Airways, forging a joint venture to expand their trans-Atlantic network, the companies announced Tuesday.
Delta, the second-biggest US airline by traffic, will invest $360 million in the joint venture, acquiring the stake from Singapore Airlines.
British mogul Richard Branson and his Virgin Atlantic will keep the majority 51 percent stake and the airline will retain its brand and operating certificate.
"Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the UK, particularly on the New York-London route, which is the largest airline route between the US and Europe," said Delta chief executive Richard Anderson.
Delta offers service to nearly 313 destinations in 58 countries on six continents and has a fleet of more than 700 aircraft.
Virgin Atlantic, founded in 1984 by Branson as an offshoot of the flamboyant entrepreneur's Virgin Group, is Britain's second-largest airline serving the world's major cities. Based at Gatwick, Heathrow and Manchester airports, its Airbus and Boeing aircraft bear colorful names such as English Rose, Jersey Girl and Hot Lips.
"I truly look forward to the possibilities our partnership with Delta will offer. We have always been known for our innovation and service and have punched above our weight for 28 years. That is why our customers love us so much. We will retain that independent spirit but move forward in a strengthened partnership with Delta," said Branson, president of Virgin Atlantic.
The deal requires regulatory approval in both the United States and the European Union and is expected to close by the end of 2013.
The alliance gives the Atlanta, Georgia-based Delta greater presence at the congested London Heathrow airport. The two carriers will operate 31 peak-day round-trip flights between Britain and North America, 23 of which operate out of London-Heathrow.
The expanded network includes a combined nine daily departures from John F. Kennedy International Airport and Newark Liberty International Airport in the New York area, and Delta and Virgin Atlantic customers will have reciprocal rights under the carriers' frequent flyer programs.
In a filing with the US Securities and Exchange Commission, the airlines said they would seek antitrust immunity from the US Department of Transportation, which "will allow a closer relationship and coordination on schedules and operations."
Singapore Airlines paid about 600 million pounds ($966.8 million) in 1999 to buy the 49 percent stake in Virgin Atlantic from Branson. The partnership deal was closed in early 2000 but did not involve integration of operations.
Last week Singapore Airlines confirmed it was in talks to sell its stake with interested parties amid media reports saying Delta was a possible buyer. The struggling carrier has seen its financial first-half net profit fell 30 percent from last year, and warned the outlook was bleak as the eurozone debt crisis dents global business confidence.
Delta investors welcomed the deal, sending shares soaring 6.0 percent to $10.75 in late morning trade in New York.