The UK government announced a rescue deal Tuesday for the troubled no-frills airline Flybe aimed at keeping Europe's largest regional carrier flying and preserving thousands of jobs.

Neither the government nor the company disclosed details of the deal, but the UK Treasury hinted that a part of the money could come from higher air passenger duties.

The Treasury will "be reviewing (the) air passenger duty to ensure regional connectivity is strengthened," it said in a statement.

"In light of these discussions, Flybe have confirmed they will continue to operate as normal, preserving flights to airports such as Southampton, Belfast and Birmingham."

Flybe is the main carrier operating in several smaller British cities, including Exeter, where it is based.

The company employs about 2,000 people and is owned by a consortium led by Virgin Atlantic.

It carries around eight million passengers annually and flies to 170 destinations around Europe from its British hubs.

The loss-making carrier was a year ago bought by the Connect Airways consortium, which also includes infrastructure specialist Stobart and investment firm Cyrus.

However, Flybe has since failed to recover in the face of weak consumer demand, fierce competition and a slowdown in Britain's economy as it faces Brexit.

Smaller airlines are also more exposed to volatile fuel costs and a struggling pound than their larger rivals.

Flybe was in danger of becoming the second British airline to do halt operations in the last four months, after the demise of holiday giant Thomas Cook in September.

Last February, British regional airline flybmi also went bankrupt, blaming high costs and Brexit turmoil.