The High Court has approved in principal a survival scheme for Aer Arann which has been in examinership since August.
The decision follows the withdrawal of objections to the scheme by Revenue after it was agreed that Revenue debts will be paid over 18 months.
The decision also paves the way for an additional €2.2m investment in the company.
This afternoon the court was told that the stark alternative to approving the survival scheme was liquidation of the company and job losses.
Revenue had strongly opposed the scheme after hearing that agreements had been reached with other creditors outside of the survival plan.
A revised plan submitted yesterday offered to pay Revenue half of the €436,000 it is owed over 12 months. However, it was later agreed that Revenue be paid all of the debt over 18 months.
Additional investment of €2.2m can now be secured for Aer Arann when the survival scheme is formally approved by the High Court on Friday.
Ms Justice Mary Finley Geoghegan was told that in addition to €3.5m investment outlined to the court last week, a further €2.2m will be invested by businessman Tim Kilroe junior.
The judge said that subject to some minor changes, the plan will be confirmed on Friday.
She said the court had been extremely concerned about the company's prospects for survival based on the plan submitted last Friday.
However, based on additional information supplied to the court she was now satisfied that the company had a reasonable prospect of survival as a going concern.
She said she was conscious of the commercial pressures on the company and while a formal order would be made on Friday, she would confirm in principal the scheme of arrangement submitted by the examiner.
The judge said she was 'glad' to be able to confirm the scheme and wished the company good luck in implementing it.
Earlier she had expressed grave concern over the viability of the scheme after she was told that the substantial investor - UK transport company Stobart - would not be willing to proceed if they were forced to change the scheme to increase payments to the Revenue Commissioners.
The judge said this would amount to an additional €22,000 per month. If the company could not withstand that relatively small amount it raised questions about assertions made to her about its viability.
However after a short adjournment, counsel for Stobart said they would be willing to agree to the scheme being changed to improve terms for Revenue Commissioners.
The court was also told that once the scheme was approved by the court, additional investment of €2.2m could be secured from businessman Tim Kilroe Jnr.
The airline has debts of almost €30m. The largest is AIB, which is owed 45.2m. The court was told it was necessary to enter into separate agreements with some creditors who supplied banking facilities, planes and other services to keep the company in business.
This had initially led to claims by Revenue that it was being unfairly treated before the matter was resolved this evening. Court protection has been extended until Friday until a formal order is made.
