Flybe PLC (LON:FLYB) shares soared higher on Monday after weekend press reports said Willy Walsh’s International Consolidated Airlines Group PLC (LON:IAG) is competing with Richard Branson founded Virgin Atlantic to take control of the airline, which put itself up for sale earlier this month.
The Sunday Telegraph said FTSE 100-listed IAG – owner of British Airways, Iberia and Aer Lingus - is tipped as the favourite to take over the low-cost airline.
READ: Flybe shares soar as it confirms talks about possible sale to Virgin Atlantic
On Friday, Exeter-based Flybe confirmed that it is in discussions with Virgin Atlantic, but said there was no certainty an offer would be made.
The airline has also said it would consider other options besides a sale, such as further reductions in capacity and costs.
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. British Airways has a long-standing bitter rivalry with Virgin.
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.
Blue chip budget airline easyJet PLC (LON:EZJ) and Irish discounter Ryanair PLC (LON:RYA) have both said they are not interested in buying Flybe.
In morning trading on Monday, Flybe shares were up another 20.1% to 20.00p having surged by over 50% on Friday