FLYBE has been saved from collapse after the UK Government agreed a rescue deal for Europe’s largest regional airline, which serves several Scottish airports.

After three days of crisis talks, Andrea Leadsom, the Business Secretary, emerged to announce that the rescue package, which is believed to include deferring Flybe’s £106 million air passenger duty[APD] bill until after the winter to help it deal with a significant cash-flow problem and a possible loan from the UK Government.

Flybe's shareholders Connect Airways, a consortium including Virgin Atlantic, Stobart Group and Cyrus Capital Partners, also made clear it would put in more funding as part of the agreement.

Ms Leadsom said she was "delighted that we have managed to reach an agreement with Flybe shareholders to keep the company in operation". The carrier said it would "continue to operate as normal".

The loss-making airline, which carries eight million passengers a year, serving many regional airports across the UK, including Glasgow, Edinburgh, Aberdeen and Inverness, employs some 2,400 people

The emergency agreement also involves a Government assessment of APD, which airlines argue restricts connectivity and passenger growth.

Grant Shapps, the Transport Secretary, said his department would "undertake an urgent review into how we can level up the country by strengthening regional connectivity".

The agreement seeks to prevent Flybe becoming the second UK carrier to fail in four months after Thomas Cook went bust in September.

But environmental groups warned that cutting APD would hamper efforts to combat the climate emergency.

Last night, the Treasury stressed that the APD review ahead of the March Budget would consider the UK's climate commitments to meet net zero by 2050.

Sajid Javid, the Chancellor, said: "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."

Mark Anderson, Flybe’s Chief Executive, welcomed the deal as a "positive outcome for the UK," which would “allow us to focus on delivering for our customers and planning for the future".

It was widely report that Mr Javid had been holding talks with colleagues to decide whether to let Flybe defer its estimated £106m APD bill for three years or to scrap the tax altogether for all domestic flights.

Passengers on domestic flights pay £26 in APD for a return trip with higher rates for longer flights and premium cabins.

The tax is expected to be worth £3.7 billion to the Treasury in 2019/20.

Before the announcement, Doug Parr, Greenpeace's UK policy director, said that any cut to airport passenger duty would be a "poorly thought-out policy, that should be immediately grounded".

He explained: "The Government cannot claim to be a global leader on tackling the climate emergency one day, then making the most carbon-intensive kind of travel cheaper the next.

"Cutting the cost of domestic flights while allowing train fares to rise is the exact opposite of what we need if we're to cut climate-wrecking emissions from transport.

"The aviation sector has got away for years with increasing its carbon footprint; the last thing we need is another incentive for them to pollute more," he added.

The British Airline Pilots' Association [Balpa] said: "This is good news for 2,400 Flybe staff whose jobs are secured and regional communities who would have lost their air connectivity without Flybe.

"Balpa looks forward to discussing the airline's future plans in detail with management, meanwhile passengers can be confident that Flybe remains an excellent choice for regional flying.”

It added: "The Government is to be applauded for stepping up to the plate to help one of the few remaining independent UK airlines and a vital one at that."