A multi-million pound investment backed by the Birmingham office of Kaupthing Singer & Friedlander has given a major boost to regional airline Eastern Airways.

Humberside-based Eastern operates scheduled services on 22 routes in the UK and four into Europe, including routes from Birmingham to Inverness, the Isle of Man and Newcastle and from East Midlands Airport to Aberdeen, Stavanger and Wick.

Steve Lewis, Kaupthing director of corporate and structured finance in Birmingham, said: "Eastern Airways focuses on the business traveller with a market leading record for frequency, punctuality, reliability and quality of service.

"The development capital funding is designed to enable the entrepreneurial management team, led by chief executive officer Richard Lake, to expand further the business in the short haul regional air travel market."

Established in 1997, Eastern Airways has grown rapidly and now boasts a turnover of around £70 million.

On top of its core domestic scheduled services, Eastern Airways also operates charter services and provides a centre of excellence for engineering work and pilot training, including third parties.

Eastern Airways chief executive Richard Lake said: "Kaupthing's support means we can drive forward our business and celebrate a decade of success with further expansion of our routes both in the UK and continental Europe."

Mr Lewis added: "This is our third deal since opening our Birmingham office in September and demonstrates further the Kaupthing model of backing proven entrepreneurs with creative and flexible financing packages.

"We look forward to working with Richard and the team to capitalise on the opportunities facing Eastern Airways."

The KPMG Midlands corporate finance team introduced Kaupthing to the transaction.

Morgan Atherton, director at KPMG, said: "Eastern Airways has developed a successful business model and grown rapidly since inception, thanks to the drive and ambition of the entrepreneurial management team.

"The funding provided by Kaupthing has given the business a further financial boost that will help management to achieve its ambitious growth strategy and take advantage of opportunities in the market place."

Stephen Kitts, of lawyers Eversheds, advised management throughout the transaction.

He said: "The air travel marketplace has been consolidating in recent years, but Eastern's success proves that there is still a place for the niche airline providing excellent levels of service and flights to destinations not served by mainstream carriers."

Other advisers were BDO Stoy Hayward, who provided financial and commercial help.