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.

I welcome Flybe's confirmation that they will continue to operate as normal, safeguarding jobs in UK and ensuring flights continue to serve communities across the whole of the UK. The reviews we are announcing today will help level up our economy. They will ensure that regional connections not only continue but flourish in the years to come - so that every nation and region can fulfil its potential.

Sajid Javid, Chancellor of the Exchequer

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

Flybe is made up of an incredible team of people, serving millions of loyal customers who rely on the vital regional connectivity that we provide.

Mark Anderson, Flybe Chief Executive
In a statement, the airline said it remains 'committed to providing exceptional air connectivity' across its network, with the full backing of its shareholders. Credit: ITV Channel TV

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.

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.

Lucien Farrell, chairman of Connect Airways

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'