Air France-KLM will acquire a 31% stake in Virgin Atlantic currently held by Virgin Group for £220 million as part of an expanded transatlantic joint venture with Delta Air Lines.

Virgin Group will retain a 20% stake and chairmanship of the UK long haul carrier founded by Sir Richard Branson while Delta will retain its 49% shareholding.

The long-planned arrangement is designed to expand and strenthen the three airlines’ transatlantic joint-venture.

Air France-KLM, Delta and Virgin Atlantic will now co-ordinate efforts to secure the appropriate regulatory approvals.

A joint venture agreement sets out the governance as well as the commercial and operational terms of the expanded transatlantic joint venture as the airlines seek to become “the preferred choice for customers travelling across the Atlantic”.

They aim to offer the most comprehensive route network, convenient flight schedules, competitive fares and reciprocal frequent flyer benefits, including the ability to earn and redeem miles across all three.

Passengers will also benefit from the co-location of facilities at key hub airports to improve connectivity and access to each carrier’s airport lounges for premium customers.

The move comes as traditional carriers on prIme North Atlantic routes, including rival partners British Airways and American Airlines, face increasing competition from low cost newcomers such as Norwegian, Wow Air and Primera Air together with the leisure airlines of Tui and Thomas Cook.