Sky and Virgin have made the most dramatic move of the year by announcing they are partnering up to form the world’s biggest airline and launch Virgin Galactic in 2021.
The companies will be combining to create a new airline that will compete with rival Qatar Airways.
Sky and Airways will be a wholly owned subsidiary of Virgin Group.
Virgin Galactic, which will launch in 2021, will be based in New York and run on the same Virgin Galactic Falcon 9 rocket that will launch Sky’s next rocket.
The Falcon 9 is the same rocket that launched Sky’s successful orbital rocket in March.
“We are thrilled to join the growing list of new global players in the space industry,” Virgin Group chief executive David Mack said.
“Together, we are going to make a real impact in the new economy.”
Sky said the deal was a natural extension of Sky’s growing global reach.
Sky has launched over 40,000 customers around the world, including a number of customers in the US and UK.
“Our new airline will have the same footprint as our existing routes and our customers are incredibly loyal,” said David Houghton, Sky’s chief executive.
Sky said it would invest a total of $1bn in the deal.
The two companies said the agreement would not affect the existing Sky network and would not impact the launch of Virgin Galactic’s NextGen rocket, which is due to launch in 2019.
The launch of the NextGen will be one of the largest in history.
It will be powered by the same Falcon 9 engine as Sky’s Falcon Heavy, which was used in Sky’s first rocket.
“This is a big deal for us and we look forward to bringing it to Virgin Galactic customers,” said Sky chief executive Richard Branson.
Virgin Group CEO David Mack told the BBC that the deal would make Sky a “major player” in space.
Virgin is in talks with SpaceX, the privately-held company that is developing a rocket that would carry people into space.
The company said it was looking at the commercial space sector as well as commercial space tourism, and was looking to commercialise the technology that would allow people to go into space without ever leaving the Earth.
Virgin’s Virgin Galactic SpaceShipTwo rocket has successfully landed on a drone ship in the Pacific Ocean and is set to return to Earth later this month.
“The fact that we are partnering with Virgin Galactic is a huge deal for our customers,” Mr Houghtons said.
The deal is the first of its kind in aviation history.
In March, Virgin Group and Airbus signed a deal for Virgin Galactic to fly Virgin Galactic astronauts in a capsule to and from Paris.
It was announced that Virgin Galactic will now launch from Heathrow Airport in London, in the UK.
Sky announced in May it would build a fleet of space taxis.