British Airways owner International Airlines Group is reportedly interested in joining the race to buy Flybe, according to reports over the weekend.
IAG has not commented on the speculation, but the report in The Sunday Telegraph has pushed Flybe’s shares up, with stock up 40% in early trading on Monday morning, settling later at around 20% up.
The unconfirmed report cited industry sources who said IAG had joined Virgin Atlantic in looking to snap up the business.
Flybe had already climbed by 70% on Friday after Virgin Atlantic confirmed it was in talks to buy the regional carrier.
Virgin issued a statement saying it is ‘reviewing its options in respect of Flybe which range from enhanced commercial arrangements to a possible offer for Flybe’.
The pair already have a trading and codeshare relationship.
Flybe’s Board also issued a statement noting the recent ‘media speculation’.
It said Virgin Atlantic is ‘one of the parties’ it is in discussions with as part of the formal sale process announced earlier this month.
"There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made. Further announcements will be made in due course as appropriate," it said.
The announcements helped push up Flybe’s share price by 50% to 14.50p in midday trading.
It is believed a purchase of Flybe would give Virgin opportunities to feed UK regional traffic into its long-haul network, plus valuable take-off and landing slots at London Heathrow Airport which are ring-fenced for domestic flights.
Virgin’s interest in Flybe comes four years after announcing the closure of Little Red, an earlier attempt to crack the domestic UK market.
Rothschild, the investment bank, is advising Virgin Atlantic on its interest in Flybe.
