Flybe yesterday issued an ultimatum to shareholders to back its sale to a Virgin Atlantic-led consortium or risk the airline being wound up.

The regional carrier warned that a failure to approve the £2.2 million deal from the Connect Airways group comprising Virgin Atlantic, Stobart Aviation and hedge fund Cyrus Capital Partners would mean investors were unlikely to get any return for their shares.

The board of the loss-making airline, which was up for sale in November, agreed the disposal to Connect airways last month but shareholders must vote for it at a meeting on March 4.

Connect Airways provided a £15 million in loans last month to enable Flybe to continue to trade

In a statement issued last night, Flybe said: “Although the price per share offered by Connect Airways was disappointingly low, its proposal was ultimately the only proposal capable of immediate execution to enable Flybe and the Flybe subsidiaries to continue to trade as going concerns.”

And the Exeter-based airline warned that if the deal is not approved, “the Flybe directors intend to take steps to wind-up the company and shareholders are likely to receive no value for their shares in Flybe”.

It added: “Accordingly, the Flybe directors believe that the terms of the acquisition remain in the best interests of Flybe shareholders as a whole and unanimously recommend that Flybe shareholders vote in favour of the resolutions.”

The latest move in the sale saga comes as a group of shareholders led by investment group Hosking Partners, unhappy with the 1p a share offer, seek to halt the sale.

They want former airline executive Eric Kohn to be installed to replace Flybe chairman Simon Laffin to investigate whether the Connect Airways proposal is the only one available.

However, the airline said in its statement: “Because in the time available there were no other parties in a position to meet both Flybe’s funding needs and the requirements of Flybe’s banks and credit card acquirers, the Flybe directors concluded, and were so advised, that the only way to avoid Flybe and Flybe Limited having to be placed into administration was to enter into a new agreement to sell Flybe’s operating subsidiaries to Connect Airways, thereby preserving the interests of Flybe shareholders and stakeholders, including customers, employees, pension scheme members and other creditors.”