I really doubt that a fleet of A330s & A320s would fit into flybe's business model too well particularly as the low cost carriers have always avoided LHR like the plague.
Regional is a possibility though but it does dovetail with mainline quite well so I would imagine that baby would be a more likely option - low cost airline + regional bases.
Mainline is trying to reinvent itself as a business carrier again with medium haul routes. Baby's ageing fleet needs investment.
Draw your own conclusions!