Branson sells majority stake in Virgin Atlantic in Air France-KLM deal

Sir Richard Branson has given up his majority holding in Virgin Atlantic in a £220m deal with rival Air France-KLM (LSE: 0LN7.L - news) amid Brexit woes for the carrier.

Under the agreement, which is subject to regulatory approval, the billionaire tycoon's Virgin Group will give up 31% of its 51% stake in the airline he founded - leaving it with 20%.

US carrier Delta Airlines continues to hold the other 49%.

The three airline groups said the deal would allow them to create "the most comprehensive transatlantic route network" by enabling tailored flight schedules between them.

Passengers using the carriers, they said, would earn flyers' benefits across the network with Virgin retaining its brand and remaining a "UK airline with a UK operating certificate".

The announcement will be seen as a direct challenge to the expanded owner of British Airways, IAG, which also has the Iberia and Aer Lingus operations in its stable and dominates slots at Heathrow.

But in a letter to staff Sir Richard, who had a bitter war of words with BA while growing Virgin, also said Brexit had had a "negative effect on the financial performance of both our holiday company and the airline, principally due to the collapse in the value of the pound."

He added: "Virgin Atlantic has made a big difference to people's flying experience over the past 33 years and transformed the airline industry for the better.

"This is a fantastic opportunity to extend our network and create a stronger customer champion, as well as being extremely beneficial to our people and the Virgin Atlantic brand that our customers love dearly."

Virgin Atlantic's chief executive, Craig Kreeger, said: "We built the Virgin Atlantic brand by providing customers with the choice they deserve and a travel experience they love.

"We couldn't be more excited that the next stage of our growth will be at the heart of the strongest partnership for customers travelling between Europe and North America.

"Together with our friends at Air France-KLM and Delta we will build on this vision of our teams creating irresistible experiences for customers flying on our network."