The piece of Virgin Atlantic's pie that Delta wants to acquire is currently held by Singapore Airlines. The 51% majority ownership stake will remain with Virgin Group and Virgin Group founder and billionaire Sir Richard Branson.
"Our new partnership with Virgin Atlantic will strengthen both airlines and provide a more effective competitor between North America and the U.K.," said Delta CEO Richard Anderson. "By combining the strengths of our two companies in a joint venture, we can ... continue building a better airline for our customers, employees and shareholders."
Virgin Atlantic will keep its brand and operating certificate, but will boost Delta's access to transatlantic flights between New York and London.
The airlines plan to seek "antitrust immunity" from the U.S. Department of Transportation. The U.S. Department of Justice and the European Union's competition regulator will also review the proposal. The airlines hope to implement the joint venture by the end of 2013.
Delta has the third lowest price-to-earnings ratio for all major airlines, and has slightly outperformed the Dow Jones U.S. Airlines Index over the past year.