Flybe is being bought for £2.2m by a consortium including Virgin Atlantic and Stobart Group.
The sale comes after the Exeter-based airline’s warning in October that it would lose £22m because of poor demand, a weaker pound and higher fuel costs.
Shareholders in Flybe will receive 1p a share, while the consortium, which also includes venture capital firm Cyrus, will inject £100m.
It will operate under the Virgin Atlantic brand. Flybe shares closed on Thursday at 16.38p.
The shares had been trading at more than 30p before the profits warning, which sparked a downward spiral in the price.
The consortium, known as Connect Airways, will initially lend £20m to Flybe to support the ongoing operations of the airline.