Lagos-based Virgin Nigeria was established in October 2004 and launched operations in June 2005. Nigerian institutional investors own 51% of the carrier and Virgin Atlantic holds the remainder, but the UK carrier is seeking to sell its stake so that it can focus on its own core long-haul operation.
A Virgin Atlantic spokesman says: "We are reviewing our shareholding in Virgin Nigeria. At the moment we are in discussions with potential purchasers. Those talks are ongoing and have been in progress for several weeks.
"We've always said, since it launched, that it's important that Virgin Nigeria goes its own way and is wholly-owned by Nigerian investors. Now it's been just over three years so it's appropriate to have those talks now. We've helped it to become a safe and reliable flag carrier for the region."
Last year Virgin Atlantic's annual profits were dragged down to just £6.6 million ($12.3 million) after Virgin Nigeria posted a £41 million loss.
The spokesman says Virgin is in discussions with several parties, which are "mostly, but not all" Nigerian. He adds that none of the candidates are airlines.
Virgin is also considering pulling its name from the operation. The spokesman says: "It is appropriate to consider whether the Virgin brand should remain linked to Virgin Nigeria. [Removing the Virgin branding] is a possible future option."
The UK carrier is making the move as it seeks to focus on its long-haul operation, says the spokesman, but he adds: "There's no doubt that lots of recent events have helped our view."
Tensions are running high between Virgin Nigeria and the Nigerian government because of a dispute over whether the airline should be allowed to continue operating its domestic services from Lagos' international terminal, which houses Virgin Nigeria's regional and international flights.
Virgin Nigeria claims that its domestic services were recently forcibly evicted from the international terminal, despite a Lagos appeal court hearing which is scheduled for 7 October. It has since temporarily relocated its domestic flights to the airport's second terminal.
The spokesman says: "As far as Virgin is concerned, we signed a detailed contract in 2004, providing all the necessary documents. A deal is a deal so Virgin Nigeria should be allowed to operate [domestic flights] out of the international terminal.
"One of the prerequisites for a good service is good connections. Businesses need stability and certainty if they are to invest, and to continue investing, in Nigeria."