A new deal to rescue struggling Flybe will give Virgin Atlantic a chance to re-enter the UK domestic market.
A consortium known as Connect Airways led by Virgin Atlantic and Stobart Group is buying struggling Flybe for £2.2 million (€2.44 million), the BBC reports.
Virgin Atlantic receives 30% of the shares in the new company, Stobart Group also 30%, while the capital fund Cyrus Capital gets the remaining 40%.
Exeter-based Flybe will in future operate under the Virgin Atlantic brand, a move that marks a return by Virgin to UK domestic flights after a failed attempt to break into the market five years ago with its Little Red brand.
Flybe carries around eight million passengers a year from airports like Southampton, Aberdeen and Cardiff to Europe and around the UK.
Higher fuel costs, currency changes and the “significant uncertainties” presented by Brexit have hit Flybe in recent months and years, chief executive Christine Ourmières-Widener.
“We have been affected by all of these factors, which have put pressure on short-term financial performance.”
Connect Airways is lending an emergency £20 million to Flybe as part of the deal and a further £80 million will be invested later.
The aim is to “create a fully-fledged UK network carrier under the Virgin Atlantic brand”, providing a clear opportunity for Virgin, which currently focuses on long-haul.
Flybe operates over 200 routes from a number of airports in the UK and also works as a subcontractor for SAS with five ATR72-600 aircraft on a number of regional routes from the SAS base at Stockholm Arlanda.
SAS has previously stated that a sale of Flybe does not immediately give rise to worries at SAS in relation to whether the British company will be able to continue production with its ATR aircraft.