Flybe: Deal struck with government to 'keep company operating' amid fears for regional airline's 2,000 jobs

The firm, which flies regularly from Southampton, is Europe’s largest regional airline and operates most domestic routes outside London.

Business secretary Andrea Leadsom said she was 'delighted' with the deal, which will reportedly entail deferring air passenger duty for 2020.

The prospect of putting Flybe’s payment of the tax on hold was mooted as part of chancellor Sajid Javid’s talks with Ms Leadsom and transport secretary Grant Shapps.

The bill, which some airlines claim restricts connectivity and passenger growth, would ordinarily cost Flybe £106m for three years.

It has also been reported the talks considered whether the tax could be cut for all domestic flights.

Domestic passengers usually pay £26 in air passenger duty for a return trip. Higher rates are placed on longer flights and premium cabins.

Ms Leadsom said: ‘Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected.

‘This will be welcome news for Flybe’s staff, customers and creditors and we will continue the hard work to ensure a sustainable future.’

About 2,000 people are currently employed by Flybe, with news of its struggle previously leaving a dark cloud over its future.

Mr Shapps added: ‘Delighted we've been able to work closely with Flybe to ensure Europe’s largest regional airline is able to continue connecting communities across Britain.

‘@transportgovuk will undertake an urgent review into how we can level up the country by strengthening regional connectivity.’

The deal to rescue Flybe comes after tour operator Thomas Cook went bust in September after massing more than £1bn in debts.

BBC business editor, Simon Jack, said Flybe's shareholders have agreed to invest more money in the airline.