You would need somebody from that airline to confirm that, but it sounds about right. The £1000 is removed from the taxable portion of income and split into a capital/interest figure whereby a smaller portion of it is subject to a withholding tax charge.
The repayment programmes I am more familiar with, result in a sacrifice from the relevant salary scale of around £1150 per month (that scale being cadet and normal F/O or Captains scales for up to a maximum period of 84 months), and the money is then repaid back to the individual as described. It is a voluntary and elective arrangement, but given the tax benefits, one that most qualifying individuals seem to avail themselves of.