A deal has been reached between insurers, airlines and the government to prevent a threatened grounding of passenger aircraft next week.
A formal announcement is expected this evening but a spokeswoman for the Department of the Environment, Transport, Local Government and the Regions (DTLR) confirmed a deal had been struck.
She said: "A solution has been reached which will keep planes flying."
The deal is thought to have been hammered out between trade secretary Stephen Byers and the treasury, adding to speculation that the government may offer to guarantee airlines in addition to their insurers.
It was feared that a reduction by underwriters in airlines' third party liability cover, to a maximum of £50m (£34.1) could have led to aircraft being grounded. Aircraft leasing companies were expected to refuse to allow aircraft to fly without greater cover.
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