The new airline will be modelled on the Australian carrier Virgin Blue

Virgin has signed a deal with the Nigerian government to create Virgin Nigeria, to be jointly owned by Virgin Atlantic and Nigerian investors.

The airline will operate domestic, regional and international services including flights to Europe and the US.

Virgin Atlantic already operates low cost airlines in Australia and Belgium and is looking to expand into the US.

Government support

Virgin Nigeria is designed as a replacement for national carrier Nigeria Airways which collapsed last year.

The airline had suffered from years of financial mismanagement, resulting in debts of more than $60m (�33m), and a poor safety record.

Nigeria is taking yet another bold step forward Sir Richard Branson

The Nigerian government has been looking for a foreign investment partner to relaunch a domestic airline.

Virgin Atlantic, co-owned by Sir Richard Branson's Virgin Group and Singapore Airlines, will own a 49% stake in the business.

Financial investors will control the remaining 51%.

An initial $50m will be invested in the airline's launch, while Virgin Nigeria hopes to create up to 20,000 jobs both within the airline and among suppliers.

Based in the Nigerian commercial centre Lagos, the airline will fly to Nigerian cities such as Abuja and Kano and African capitals including Accra and Dakar.

Bold step

Speaking before a meeting with Nigerian President Olusegun Obasanjo on Tuesday, Sir Richard said he was "honoured and excited" to be involved in the venture.

"Nigeria is taking yet another bold step forward," he said.

"We aim to create the best airline, not just in Nigeria but in the world, based in Africa."

Virgin Nigeria will operate separately from Virgin Atlantic's existing services between the UK and Nigeria which will continue as normal.

The airline is being modelled on Virgin Blue, a low cost carrier launched in Australia in 2000.

Virgin Blue has proved a success, garnering almost a third of the domestic market and floating on the Australian stock market in December 2003.

Virgin Group is also keen to launch a similar low cost operation, Virgin America, in the United States.