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Struggling airline Flybe is facing fresh doubts over its future amid concern about a rescue loan and the impact of coronavirus on its bookings.
A £100m government loan to help stabilise the business aimed at stablilising the airline may now be in doubt.
A source would not comment on a Financial Times report that the request for finance had been rejected.
But the source added that the virus, as with other airlines, had hit bookings.
“Coronavirus has made a difficult situation far more difficult,” the BBC was told.
According to the FT, the airline believes it has enough financial resources to survive “until the end of this month”.
As part of a rescue deal announced in January, it agreed that Flybe could defer tax payments of “less than £10m” with HM Revenue and Customs. The government 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. It flies the most UK domestic routes between airports outside London.
The airline was bought by a consortium comprising Virgin Atlantic, Stobart Group and Cyrus Capital in February 2019, but has continued to make losses.
Rival Ryanair has predicted the drop in demand for flights due to the coronavirus will result in some European airlines failing in the coming weeks.
At the time of Flybe’s rescue, rival airlines complained that they should not be penalised for their own success and should also be given a tax holiday. British Airways owner International Airlines Group claimed the arrangements breached state aid rules.
Neither Flybe nor the Department for Transport would comment on the speculation.