The government has agreed a rescue plan for troubled regional airline Flybe.

Ministers agreed to work with Flybe to figure out a repayment plan for a significant tax debt that is thought to top £100m.

Meanwhile, the firm’s owners have agreed to pump more money into the loss-making airline.

Business Secretary Andrea Leadsom said the deal would keep the company operating.

That will be a relief to many of the eight million passengers who fly with the airline each year.

However, the chief executive of the owner of British Airways has attacked the move as a misuse of public funds.

In a letter to Transport Secretary Grant Shapps, a copy of which has been seen by the BBC, Willie Walsh questioned why the taxpayer is picking up the tab for the airline’s mismanagement.

He pointed out that one of Flybe’s biggest shareholders Virgin Atlantic, is part owned by the US’s Delta, one of the world’s largest and most profitable airlines.

Flybe services dozens of UK domestic routes that are not flown by other airlines, making it the largest carrier to fly out of some regional airports like Newquay.

“Flybe plays a critical and unique role in the UK aviation system, supporting the development of the regions, providing essential connectivity to businesses and stimulating the growth in trade,” the boss of the Airport Operators Association, Karen Dee, said in a statement welcoming the rescue deal.

As part of the agreement, Flybe’s shareholders, which include Virgin Atlantic and Stobart Group, have agreed to put more money into the business.

The government has promised to review the £26 air passenger duty that is levied on domestic UK return fights, which has added to the airline’s losses.