Flybe has confirmed that flights will continue to operate as normal, after the carrier and its owners reached an agreement with the UK government.

The exact details of the deal have not been published, but it is understood Flybe’s owners Connect Airways will now inject further cash into the troubled regional carrier to keep it afloat.

At the same time the government has agreed to review Air Passenger Duty ahead of the March Budget, “to ensure regional connectivity is strengthened while meeting the UK’s climate change commitments to meet net zero by 2050”.

And it is also understood the government is to allow Flybe to defer some of its outstanding APD payments – a move which has not gone down well with rival carriers including British Airways.

The BBC reports that BA’s parent company IAG has filed a complaint to the EU, arguing that Flybe’s rescue breaches state aid rules.

Earlier this week it had been reported that Flybe was on the brink of collapse, amid tough winter market conditions and a growing tax burden.

In a statement Business Secretary Andrea Leadsom said:

“I am delighted that we have managed to reach an agreement with Flybe shareholders to keep the company in operation, ensuring that regions across the country can continue to be connected.

“My department and others across government have worked tirelessly in an incredibly short timeframe. This will be welcome news for Flybe, their customers and dedicated employees, as well as those in the supply chain. We will continue to work with Flybe and regional operators to find a sustainable long term future.”

Meanwhile Flybe posted the following message on its Twitter page yesterday evening:

“We are delighted with the support received from the Government and the positive outcome for our people, our customers and the UK. Flybe remains committed to providing exceptional air connectivity for the UK regions with the full support of its shareholders.”

And Connect Airways’ chairman Lucien Farrell said in a statement:

“We are very encouraged with recent developments, especially the Government’s recognition of the importance of Flybe to communities and businesses across the UK and the desire to strengthen regional connectivity.   As a result, the shareholder consortium has committed to keep Flybe flying with additional funding alongside Government initiatives.”

Flybe operates nearly 40 per cent of British domestic flights, and over half of those outside London.

The carrier has previously stated that domestic APD rates (effectively £13 for a single journey) disproportionately affect its customers .

Any move to cut APD would be welcomed by airlines, but it is being criticised by rail industry trade bodies, as well as climate campaign groups.

It’s less than a year since a consortium led by Virgin Atlantic and the Stobart group agreed to purchase the troubled carrier, promising to invest up to £100 million into the airline, and only a few months since plans were confirmed to rebrand Flybe as Virgin Connect.

The carrier operates around 75 aircraft, serving over 80 airports across the UK and Europe.