Delta Air Lines has announced plans to buy a 49 per cent stake in Virgin Atlantic for $360 million from Singapore Airlines.

Delta is also proposing a joint venture with Virgin on routes between the UK and the US in a move that means British Airways faces stronger competition.

The deal is a boost for Virgin, which has been squeezed on its transatlantic routes after large European and US carriers formed three joint ventures to dominate one of the most lucrative markets for air travel.

The deal should also help Delta, because Virgin is the fourth-biggest airline at capacity-constrained Heathrow airport.

Delta’s planned $360 million payment for the Virgin Atlantic stake contrasts with the £600 million that Singapore Airlines paid for the shareholding in 1999. – Copyright The Financial Times Limited 2012