Singapore Airlines is buying a 49 per cent stake in Virgin Atlantic, the airline owned by the British entrepreneur, Mr Richard Branson, for $966 million (€959 million).

Mr Cheong Choong Kong, Singapore's chief executive, said the two airlines had similarly high service standards and their route networks would complement one another.

He added that neither airline had any plans to cut flights as a result of the deal.

"I've been looking at Virgin with unseemly desire ever since its birth 15 years ago. Virgin was meant for Singapore Airlines and Singapore Airlines was meant for Virgin," Mr Cheong said.

Mr Branson said Virgin had no plans to join the worldwide Star Alliance. Singapore intends to join the grouping, which is led by United Airlines of the US and Lufthansa of Germany, next year.

Mr Cheong said there was nothing to prevent Star Alliance members entering other bilateral agreements.

Under the deal, £500 million sterling (€796 million) of the purchase price will go to Mr Branson's privately owned soft drinks-to-financial services Virgin group.

Singapore will invest £49 million in the Virgin Atlantic airline. Mr Branson will invest a further £51 million of the purchase price in the airline.

Mr Branson also said he would make "a small investment" in Singapore Airlines.

The deal leaves Mr Branson with management control of his airline and funds to invest in Virgin.com, his online service, and a mobile telephone operation.

He does not believe the agreement will require any regulatory approval.

The two airlines would control no more than 2.5 per cent of take-off and landing slots at London's Heathrow airport and there was no overlap in their route networks.

He said he did not expect the European Commission to have any objection.

The agreement will strengthen Mr Branson's hand in his battle with British Airways, his bitter rival, to win customers on flights between Britain and the US.

Virgin and Singapore are expected to conclude a code-sharing agreement.

This will allow Singapore to sell tickets on Virgin's flights from London's Heathrow airport to US destinations.

BA's shares fell 20.25p to 401.75p.

For Singapore, which operates a fleet of 93 aircraft, the key benefit of what analysts widely considered an expensive deal, lies in size - gaining access to Virgin's routes, which link Britain to the US, the Caribbean and Africa.

Mr Branson said that being part-owned by Singapore, which is quoted on the Singapore stock exchange, was preferable to floating the airline in London.

"Instead of having outside shareholders or small shareholders who are not contributing to the company's success, we've got a shareholder who will contribute to our success," he said.