Richard Branson's Virgin Atlantic has teamed up with Stobart Group and Cyrus Capital to buy Flybe for £2.2m.

The consortium is aiming to rebrand the struggling British regional carrier and use it to feed customers to its long-haul flights. 

It will provide a £20m bridging loan facility to support Flybe's working capital requirements and up to £80m of funding would be made available once the deal was completed. 

Flybe, which operates routes from about 25 British airports, including domestic connections to London's Heathrow, said its short-term performance had been hit by higher fuel costs, currency fluctuations and uncertainties presented by Brexit. 

"By combining to form a larger, stronger, group, we will be better placed to withstand these pressures," Flybe chief executive Christine Ourmieres-Widener said. 

A joint venture company called Connect Airways - 40% owned by Cyrus' unit DLP Holdings and 30% each owned by Stobart Group's aviation unit and Virgin Atlantic - had won the backing of Flybe's board to buy the airline. 

However, Flybe's shareholders will receive one pence in cash for each Flybe share under the terms of the recommended offer, a 94% discount to yesterday's closing share price of 16.38 pence. 

Flybe, Britain's biggest domestic airline, was valued at £215m when it joined the London Stock Exchange in 2010.

Airlines have been looking to consolidate in many markets as a result of rising running costs, higher fuel prices and increased competition from budget carriers. 

Air Berlin, once Germany's second largest carrier, went into administration in August 2017 when former parent Etihad Airways withdrew funding.

Nordic budget airline Primera Air and Cypriot counterpart Cobalt both collapsed last October. 

Virgin Atlantic, which is 49% owned by Delta Air Lines, said Flybe would provide "excellent connectivity to our extensive long haul network and that of our joint venture partner, Delta Air Lines, at London Heathrow Airport and Manchester Airport". 

"In the near future, this will only increase, through our expanded joint venture partnership with Air France-KLM," said Virgin Atlantic chief executive Shai Weiss. 

The combined business will include a UK network carrier, with all flying operations except Stobart Air operating under the Virgin Atlantic brand. 

However, it plans to operate independently of Virgin Atlantic with only support functions having some overlap. 

Connect Airways will also buy Stobart Group's regional airline and aircraft leasing business immediately before the Flybe deal completes, the companies said in a statement, without disclosing a deal value.