UK regional carrier Eastern Airways is planning to acquire local operator Air Southwest from its parent, Sutton Harbour Holdings.
Sutton Harbour stated earlier this year that it was putting Air Southwest on the market after the economic climate weighed on the company's transport division.
Eastern Airways says the acquisition "makes perfect sense" and that it has reached an agreement in principle on the deal, completion of which it expects next month. Terms have not been disclosed.
It will retain the Air Southwest brand for services in the southwest UK, including routes from Plymouth, Newquay and Bristol.
Eastern says the takeover demonstrates a "commitment to provide a continuation" of the Air Southwest operations.
"Integration of the two airlines also enables greater operational flexibility and efficiency, as we can look into synergies by bringing both networks and fleets closer together," says Eastern managing director Richard Lake.
Air Southwest has a fleet of five Bombardier Q300 turboprops while Eastern Airways primarily uses British Aerospace Jetstream 41s, Saab 2000s and Embraer ERJ-135s.
Eastern Airways is based in Humberside in the north of the country, and operates a network of domestic destinations as well as routes to Ireland, Norway and France.
Sutton Harbour chief Nigel Godefroy says the sale will "bring stability" to Air Southwest.