Flybe Group PLC (LON:FLYB) shares surged more than 52% after confirming Virgin Atlantic as "one of the parties" it is in discussions with about a possible sale of the airline.
Responding to media reports about the talks, Flybe said: "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."
READ: Britsh Airways owner IAG and easyJet seen as among possible bidders for Flybe
The news first emerged in a Sky News report late Thursday.
A source had told Sky News that Flybe would provide opportunities to feed passenger traffic into Virgin Atlantic’s long-haul network and access valuable take-off and landing slots at London Heathrow Airport.
The news outlet did not mention any financial details but Flybe had a market capitalisation of just over £20mln at Thursday’s closing share price.
Virgin Atlantic, which is owned by Richard Branson’s Virgin Group and US airline Delta Air Lines, mainly runs flights from the UK to the US.
Last week, Flybe said it was in talks with “a number of strategic operators” about a potential sale of the company as it reported a 54% drop in first-half profits to £7.4mln on a 2.4% drop in revenues to £419.2mln.
The move comes after the company warned last month that it would post a full-year loss of £22mln due to subdued consumer demand, higher fuel costs and a weaker pound following the Brexit vote.
Tough competition in the industry has also led to a price way between airlines. The difficult market conditions led to the collapse of Air Berlin and Monarch Airlines last year.
Shares in Flybe rose to 14.70p in afternoon trading.
-- Adds share price, adds Flybe's confirmation of report ---