A consortium including Virgin Atlantic and Stobart are to buy Westcountry-based airline Flybe and rename it.
The regional airline, based in Exeter, was put up for sale two months ago - at the time blaming poor demand, a weaker pound and higher fuel costs.
The £2.2 million pound deal will see Flybe become part of Connect Airways and re-branded Virgin Atlantic under the terms of a recommended cash offer.
A £20-million bridge loan facility to support Flybe's 'ongoing working capital and operational requirements' has been agreed.
A further £80 million of further funding will be given to the combined group to invest in its business and support its growth.
Christine Ourmieres-Widener, Flybe’s CEO said: "Flybe plays a vital role in the UK’s transport infrastructure with a UK regional network which uniquely positions it to benefit from growing demands from long haul carriers for passenger feeder traffic.
"We have successfully implemented a clear strategy in recent years focused on tighter fleet management, improving revenue per seat and increasing load factors.
"The pursuit of operational excellence has reduced maintenance times and increased efficiencies and customer satisfaction.
"However, the industry is suffering from higher fuel costs, currency fluctuations and significant uncertainties presented by Brexit.
"We have been affected by all of these factors which has put pressure on short-term financial performance.
"At the same time, Flybe suffered from a number of legacy issues that are being addressed but are still adversely affecting cashflows.
"By combining to form a larger, stronger, group, we will be better placed to withstand these pressures.
"We aim to provide an even better service to our customers and secure the future for our people."
Matt Roach, managing director of Exeter Airport said: “Any deal which safeguards the future of the UK’s principal regional airline is important because regional connectivity is vital to our economy and regional airports need sustainable carriers.
"At Exeter we’re committed to supporting growth by providing the best possible service to people in the region and extending the choice of routes from their local airport. We have invested £15m in the airport in the last five years and will spend a further £1m on terminal enhancements to cater for an anticipated 100,000 extra passengers this year, taking us past the one million mark.”
Shai Weiss, CEO of Virgin Atlantic said: "The Virgin Atlantic brand is built on the foundation of putting customers at the heart of everything we do, providing them with the choice they deserve and a travel experience they love. All possible because of our amazing people.
"We are pleased to have this opportunity to partner with Stobart Group and Cyrus Capital to bring Virgin Atlantic service excellence to Flybe’s customers.
"Together, we can provide greater connectivity to our extensive long haul network and that of our joint venture partners Delta Air Lines, at Manchester Airport and London Heathrow.
"In the near future, this will only increase, through our expanded joint venture partnership with Air France-KLM."
Warwick Brady, CEO of Stobart Group said: "The Board of Stobart Group believes that bringing Stobart Air together with Flybe and partnering with Virgin Atlantic and Cyrus Capital is the best way for us to play an active role in regional airline consolidation.
"The combined entity will be a powerful combination with sufficient scale to compete effectively in the UK and European airline markets.
"It will allow us to continue to work with Flybe and provides an excellent opportunity to continue to grow passenger numbers at London Southend Airport."