A consortium led by Richard Branson's Virgin Atlantic and Stobart Group has agreed an offer to take control of Exeter based airline Flybe, valuing it at £2.2 million.
The board of Flybe has recommended the offer of 1p per share, which represents a significant markdown on the company's Thursday closing price of 16.38p.
The consortium, which also includes Cyrus Capital Partners, will form a joint venture called Connect Airways which will combine Flybe with Stobart Airways.
Flybe will continue to serve customers and communities across the UK and Ireland. In due course Flybe will be rebranded to Virgin Atlantic.
The Combined Group intends for Flybe to continue as an independent operating carrier with a separate UK Air Operator Certificate (AOC) under the Virgin Atlantic brand.
Stobart Air is intended to continue under a separate Irish AOC.
Cyrus will own 40% of the new company, while Virgin and Stobart will take 30% apiece.
It will also provide a £20 million bridge loan to Flybe and £80 million of further funding to the combined group.
Flybe chief executive Christine Ourmieres-Widener said the firm had been forced to seek a buyer due to higher fuel costs, currency fluctuations and Brexit uncertainty.
Flybe have also said they have made an an agreement with Vueling Airlines to sell its slots at London Gatwick Airport for £4.5 million.
Vueling is a subsidiary of British Airways owner IAG.
The funds will be paid in two tranches, one due in the next few days for slots to be used this summer, and the second due in June for slots to be used during winter.
Flybe is Europe's largest regional airline, and flies more UK domestic flights than any other airline.
It currently operates 192 routes serving 14 countries from 75 departure points in the UK and Europe, with a fleet of 76 aircraft.