Jersey to loan Blue Islands up to £10m
Blue Islands will be given a support loan of up to £10m by the Government of Jersey.
The investment will help "maintain important links" with UK and European destinations, the government said.
Part of the deal is for the airline to become a "base carrier" for the island for at least the next 10 years.
The support also ensures "access to essential medical care, education and connections" for islanders, it added.
The loan will be paid back to the government over six years.
The airline has been operating lifeline flights from Jersey to Southampton throughout the pandemic.
Commercial flights resumed on 3 July, following the borders reopening after being closed since March by coronavirus.
One case of Covid-19 has already been detected by the testing at the airport.
Minister for Treasury and Resources Susie Pinel acknowledged the airline served UK airports which "cannot accommodate larger planes or are not commercially viable" for larger airlines.
Matt Thomas, head of Ports of Jersey, said: "Air connectivity is critical for the way we live our lives as islanders.
"It is crucial for our tourism and business communities, but as importantly, for us to visit loved ones, access essential medical care and for our children's education."
Minister for Economic Development Lyndon Farnham said maintaining connectivity had a "major role to play in the recovery of Jersey's economy", especially for the finance sector.
He said: "It is critical that an island with a well-established tourism and hospitality industry, and a mature financial services sector, can maintain reliable air links with the UK and the rest of the world."
Blue Islands originated in Alderney, operating under a variety of names including Rockhopper, shifting its operations to Guernsey in 2006.
It was a franchise partner with Flybe, before the company's collapse in March.