Unions have expressed fears that airline Flybe is on the verge of administration, threatening thousands of jobs and the future of a number of regional airports.
Crisis talks were held throughout the day on Wednesday to try to secure a rescue package, but it is understood no deal has been agreed.
The struggling airline was saved from collapse earlier this year but has been unable to obtain finance from the Government.
Mike Clancy, general secretary of the Prospect union, said it would be a “devastating blow” for its members working for Flybe if it goes into administration.
A domino effect now puts 1,400 jobs in the wider supply chain at immediate risk and threatens the future of vital regional airportsNadine Houghton, GMB union
He said: “The airline provides important connections to and from parts of the UK where other viable options often don’t exist.
“A number of regional airports are also highly reliant on Flybe for most or all of their scheduled services.
“Prospect will do everything we can to support our members but the truth is the Government has badly let them down.
“The failure to provide the loan that is required as part of a package of rescue measures means the Government has failed in its commitment to every part of the UK.”
Nadine Houghton, national officer of the GMB union, said: “These unfolding developments are a tragedy not only for Flybe’s loyal workforce, but a domino effect now puts 1,400 jobs in the wider supply chain at immediate risk and threatens the future of vital regional airports.
“The last thing regions crying out for investment need is to see infrastructure that maintains good jobs ripped away.
“We need the Government to urgently step in and save jobs wherever possible. The damage to already fragile local economies must be minimised.”
Flybe has been hit by a slump in bookings since the outbreak of the coronavirus.
As part of the January rescue deal, it agreed an arrangement to defer tax payments of “less than £10 million” with HM Revenue and Customs.
Ministers also agreed to hold a review into air passenger duty (APD).
The structure of APD – which adds £26 to the price of most return domestic flights such as those operated by Flybe – could be altered in next week’s Budget.
Flybe serves around 170 destinations and has a major presence at UK airports such as Aberdeen, Belfast City, Manchester and Southampton, which will be hugely affected by a loss of its business.
It flies the most UK domestic routes between airports outside London.
It was bought by a consortium of Virgin Atlantic, Stobart Group and Cyrus Capital in February 2019, but has continued to make losses.
Shadow transport secretary Andy McDonald said: “The collapse of Flybe is disastrous news for passengers and employees alike and will cause real anxiety in many regions throughout the country.
Communities will be concerned about what this will mean for their local economiesAndy McDonald, shadow transport secretary
“The Civil Aviation Authority is sadly very well practised, following the collapse of Monarch and Thomas Cook, at responding to airline failure and looking after passengers. No doubt they will do that once more.
“Yet again, more airline workers face an anxious future and the Government has to respond and provide them with all necessary support.
“Flybe has provided critical connectivity for many locations throughout the country, especially where there is currently no realistic transport alternative other than flying.
“The Government has to answer how those vital links will be maintained following Flybe’s collapse.
“Communities will be concerned about what this will mean for their local economies and the Secretary of State has to come up with answers to these questions as a matter of urgency.”
Flybe aircraft at airports including Edinburgh are not being refuelled and engineers are being laid off, sources told the PA news agency.
There is expected to be a big knock-on effect among airport staff such as baggage handlers.