UPDATE 4-Britain reaches deal to save regional airline Flybe

Regional airline Flybe will carry on operating after the British government struck a deal with shareholders to avert collapse, business minister Andrea Leadsom said on Tuesday. Flybe flights operated as normal on Tuesday, a day after the emergence of reports suggesting it needed to raise new funds to survive through its quieter winter months.

"Delighted that we have reached agreement with Flybe’s shareholders to keep the company operating, ensuring that UK regions remain connected," Leadsom wrote on Twitter. "This will be welcome news for Flybe's staff, customers and creditors and we will continue the hard work to ensure a sustainable future."

Leadsom did not give details of the deal and the business and finance ministries did not immediately respond to requests for comment. With Flybe's finances at breaking point, Transport Minister Grant Shapps held talks earlier about a potential cut to air passenger taxes on all domestic flights to help the company.

Prime Minister Boris Johnson said that Flybe is important for Britain's transport links and that the government would do what it could to help the carrier. The BBC reported that negotiations could lead to a cut to air passenger duty (APD), while Sky News said there could be a deal to allow Flybe to defer an APD payment of more than 100 million pounds ($130 million) for three years.

Flybe, which has 68 aircraft and about 2,000 staff, was bought last year by Connect Airways, a consortium created by Virgin Atlantic, Stobart Group and investment adviser Cyrus Capital.