Singapore Airlines has sold its 49% stake in Virgin Atlantic to rival Delta, in a move that will bolster Virgin's reach in the United States and intensify its rivalry with British Airways.
The deal was announced just 24 hours after a verbal spat between the chief executive of BA's parent firm and Virgin founder Sir Richard Branson over Virgin's future.
In their statement, Delta and Virgin said their joint venture would enhance competition between the UK and North America, offering greater benefits for customers travelling on those routes.
As part of the agreement Delta, which is the largest carrier in North America, will invest \$360m (£224m) in Virgin Atlantic.
Virgin Group and Sir Richard will retain a majority 51% stake and Virgin Atlantic Airways will retain its brand and operating certificate.
Between them, they will jointly operate up to 31 round-trip flights between the US and UK each day.
Steve Ridgway, Virgin Atlantic Chief Executive, said: "Consumers will reap the rewards of this partnership between two great airline brands on services from the UK to the USA, Canada and Mexico through a shared ethos in the highest standards of customer service.
"This unique joint venture will deliver much more effective competition at Heathrow.
"Both airlines are confident that the Department of Transportation will be as convinced as we are of the extensive consumer benefits arising from this joint venture, with expedited approval being granted by the end of 2013.
"The transatlantic market is Virgin Atlantic's heartland - it’s where we started. By aligning with Delta we can continue to grow our North American network and offer greatly enhanced connectivity across the USA."
Sir Richard, who is Virgin Atlantic's President, commented: "This is an exciting day in Virgin Atlantic history. It signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business.
"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."
News of the deal followed the latest spat between BA and Virgin. Sir Richard offered to pay staff at BA £1m if the Virgin brand disappeared within five years as the boss of BA's parent firm, Willie Walsh, had suggested would be the case if Delta sided with Virgin.
Mr Walsh is reported to have responded that he did not have £1m as he was not a billionaire banker (referring to Virgin Money) but would settle for a 'knee in the groin' instead.