Flybe bosses have held crunch talks with the government in a bid to save the airline.
Discussions were held with the Department for Business, Energy and Industrial Strategy (BEIS) and the Department for Transport (DfT) over the weekend to see whether they could provide or facilitate emergency financing, according to the PA news agency.
Flybe – which was operating as normal on Monday morning – has been hit by a series of problems, including falling demand, rising fuel costs and the weakening of the pound.
If it collapses, it would be the second UK airline to fail in four months, following the demise of Thomas Cook.
Around 2000 people are employed by the Exeter-based airline which operates out of Scottish airports including Glasgow, Edinburgh, Aberdeen and Inverness.
It was bought by a consortium consisting of Virgin Atlantic, Stobart Group and Cyrus Capital in February 2019 following poor financial results.
The consortium, known as Connect Airways, paid just £2.2m for Flybe’s assets but pledged to pump tens of millions of pounds into the loss-making airline to turn it around.
The holding of rescue talks with the government indicates the financing requirements have become greater than expected.
Flybe is Europe’s largest regional carrier, flying around eight million passengers a year to 170 destinations across the continent.
A Flybe spokeswoman said: “Flybe continues to focus on providing great service and connectivity for our customers, to ensure that they can continue to travel as planned.
“We don’t comment on rumour or speculation.”
Spokesmen for BEIS and the DfT issued identical statements which read: “We do not comment on speculation or the financial affairs of private companies.”
The airline began as Jersey European Airways in 1979, operating regional flights from Jersey.
Its route network grew and it was rebranded British European in 2000, before becoming Flybe in 2002.