UPDATE 2-UK's Stobart invests $12 mln in rescue of airline Flybe

* Stobart is part of consortium that bought Flybe

* Flybe rescue backed by UK government earlier this week
(Adds background, quote from statement)

Jan 16 (Reuters) - Britain's Stobart Group will
provide 9 million pounds ($11.8 million) in funding for Flybe as
part of this week's government-backed rescue of the regional
airline, the infrastructure group said on Thursday.

Stobart said it had already invested 45 million pounds in
Connect Airways, a consortium comprising the London-listed
company, Cyrus Capital and Richard Branson's Virgin Atlantic,
which acquired the assets of Flybe last year.

Stobart holds less than a one-third shareholding in the
consortium, which has to date provided 110 million pounds in
funds to Connect Airways.

Flybe was rescued on Tuesday after the British government
promised to review taxation of the industry and shareholders
pledged more money to prevent its collapse. The agreement came a
day after reports suggested it needed to raise new funds to
survive through its quieter winter months.

As part of the plan, the government promised to review air
passenger duty, a tax on flights departing from UK airports.

Stobart, which is now separate from the Eddie Stobart
haulage business, said delays in getting regulatory
clearance for the consortium's plans to buy Flybe's assets,
coupled with a number of other factors including legacy issues,
had affected its turnaround plan for the airline.

"This resulted in a situation in which a further injection
of funds is required to ensure continued flying," Stobart said
in a statement.

Roughly a year ago, Flybe was also approached by Stobart's
former CEO Andrew Tinkler about an alternative financing
proposal that challenged Connect's deal.

Flybe carries eight million passengers a year between 71
airports across the UK and Europe, according to its website.

Since the rescue deal, details of which were not disclosed,
British Airways owner IAG has filed a complaint with
European Union regulators, calling it a "blatant misuse of
public funds".

Virgin Atlantic and Cyrus Capital did not immediately
respond to a Reuters request for a comment on Thursday.

($1 = 0.7654 pounds)
(Reporting by Muvija M and Yadarisa Shabong in Bengaluru;
Editing by Saumyadeb Chakrabarty and Mark Potterd)