Aer Lingus stock jumped as much as 21 percent, the biggest gain since June 2012, and was trading 14 percent higher at 2.07 euros as of 2:22 p.m. in Dublin, where the airline is based.
IAG is interested in Aer Lingus because it controls scarce landing slots at the London Heathrow airport base of British Airways, the FT said, citing people familiar with the situation.
A bid from IAG would require the backing of Ryanair Holdings Plc, which owns a near 30 percent stake, the newspaper reported. The Irish discount carrier has seen attempts at a full takeover blocked by regulators, indicating that it might be prepared to do a deal given an attractive enough price.
The Irish government owns 25 percent of Aer Lingus and Etihad Airways of Abu Dhabi has a minority stake.
IAG didn’t immediately respond to questions from Bloomberg News about any planned bid for Aer Lingus. Calls to Aer Lingus and Ryanair weren’t immediately returned.
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