Deal agreed between Flybe and UK government

Regional airline Flybe has secured a rescue deal with the Government that will allow it to keep operating, the Business Secretary said.

Andrea Leadsom said she was "delighted" with the agreement, which came after rescue talks over the weekend.

The airline is a vital air link for the Channel Islands, providing services to Birmingham, Southampton, Manchester and other UK transport hubs.

The deal means Flybe has avoided being the second UK airline to fail in fourmonths, after Thomas Cook went bust in September.

Ms Leadsom tweeted that the government would continue to 'work hard to ensure a sustainable future.'

Chancellor Sajid Javid had held talks with the business and transport secretaries to discuss if the loss-making regional carrier can defer paying this year's estimated air passenger duty (APD) bill of £106 million for three years or whether the tax should be cut for all domestic flights, according to multiple reports.

Airlines claim APD restricts connectivity and passenger growth. Passengers on domestic flights pay £26 in APD for a return trip, with higherrates for longer flights and premium cabins. The tax is expected to be worth £3.7 billion to the Treasury in 2019/20.

Mr Javid confirmed that the government would review the levy.

In a statement, the airline said it remains 'committed to providing exceptional air connectivity' across its network, with the full backing of its shareholders.

The company's shareholders Connect Airways, a consortium including Virgin Atlantic, Stobart Group and Cyrus Capital Partners, will put in more funding as part of the agreement.

Jersey's Economic Development Minister Senator Lyndon Farnham described the update as 'welcome news', describing the airline is an 'important and valuable airline partner for Jersey and the other Channel Islands'