Air France-KLM is buying almost a third of Virgin Atlantic, leaving Sir Richard Branson's parent company, Virgin Group, with a minority stake in the airline he founded.
Air France-KLM is taking a 31% stake, worth £220m, in Virgin Atlantic as part of a four-way joint-venture with US partner Delta.
Virgin Group's share will fall from 51% to 20%, while Delta will retain 49%.
Sir Richard said he would remain "very much involved" after the deal.
He said in an open letter that the new joint-venture would be "extremely beneficial" to the airline, customers and the brand, and recalled key moments in Virgin Atlantic's history, striking a valedictory tone.
Jean-Marc Janaillac, chief executive of Air France-KLM, said the deal would give customers "even more choice between Europe, UK and the United States via twelve hubs on both sides of the Atlantic".
Virgin and Delta have operated a joint-venture for almost five years, plying the busy routes between Europe and the United States.
Competition has intensified in recent years, with newcomers including Norwegian and British Airways' low-cost Level service offering no-frills long-haul flights.
The new venture, which will also include troubled Italian carrier Alitalia, will operate 300 transatlantic flights per day.
In a joint press release Virgin and its partners said the venture would offer "convenient flight schedules with competitive fares and reciprocal frequent flyer benefits, including the ability to earn and redeem miles across all carriers".
Virgin Atlantic, set up in 1984, was one of the earliest companies in Richard Branson's Virgin brand portfolio.
In his open letter, Sir Richard recalled its eventful rivalry with British Airways, the impact of the 9/11 terrorist attacks and the financial crisis.
Sir Richard wrote that as he got older he was keen to ensure that "all the necessary building blocks are in place for Virgin Atlantic to continue to prosper and grow for the next 50 years".
While transatlantic routes are among the most lucrative, Virgin has had mixed fortunes in recent years.
In 2016 it reported its best profits for five years, but the company warned earlier this year that it was likely to go into the red again in 2017 as the weaker pound pushed up costs and put off holiday-makers.