The deal will see the airline carry up to 10m passengers a year

Exeter-based budget airline Flybe has announced it has reached agreement in principle to buy BA Connect business.

BA Connect handles most of BA's domestic and European routes that do not fly out of Heathrow or Gatwick.

It is due to be sold next year for an undisclosed sum and the move means that Flybe will become the largest regional airline in Europe.

Significant increase

The deal comes as BA blames this summer's airport terror alerts for a drop in profits, which are down by 27%.

BA Connect operates 52 routes from 13 airports around the UK, although BA said it will keep hold of the services from London City Airport and between Manchester and New York.

The deal will significantly increase Flybe's route network both in the UK and continental Europe and give the company 159 routes, increasing from 101.

The airline will operate from 23 UK and 36 European airports, up from the present total of 47 and hopes it will carry 10m passengers a year, up from 5m a year at the moment.

Flybe's chief executive Jim French said: "We believe this announcement today means that the UK regions will now have their own strong and well financed airline."