The move is part of a major joint venture set to include the airline – which was founded by Branson in 1984 – its partner Delta Air Lines and Air France-KLM.
The French carrier will buy a 31% stake in Virgin Atlantic from Branson’s Virgin Group, the companies said on Thursday – taking his stake in the airline from 51% to 20% and he will retain the carrier’s chairmanship.
The deal is subject to regulatory approval, and to the approval of Air France-KLM shareholders.
Delta retains 49% of Virgin Atlantic, a stake it acquired from Singapore Airlines in 2012, making it now the largest shareholder in the UK carrier.
The US carrier and fellow SkyTeam alliance partner China Eastern Airlines will each take a 10% stake in Air France-KLM in a parallel deal.
Branson said: “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.”
In a letter to staff, the billionaire entrepreneur said the airline industry had consolidated since its launch going on to say "it’s now our turn to put ourselves at the heart of an important alliance".
He wrote: “Today is an exciting day for Virgin Atlantic and all of our team.”
Branson added: “Now we have Brexit which before it’s even happened has 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.”
"With these three partners in place and with me – and one day, the wider Branson family – still very much involved, we have the foundations to make sure this is so," he added.
The deal, set to last for at least 15 years once it gains regulatory approval, see the carriers combine their transatlantic routes.
The joint venture, which will also include Italian carrier Alitalia, will enable the four airlines to offer more than 300 daily non-stop transatlantic flights from 12 hubs including from Amsterdam, Atlanta, Heathrow, JFK and Los Angeles.
Craig Kreeger, Virgin Atlantic chief executive, 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 traveling 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.”
Ed Bastian, Delta’s chief executive, added: “By working even more closely with our great partners at Air France-KLM and Virgin Atlantic, together we will develop a path to increase competition across the Atlantic that will spur additional benefits for customers, employees and shareholders.”
