People familiar with the matter say IAG is considering increasing the proposed offer to as much as €2.50 ($2.95) a share as early as this week, though no final decision has been made.
London-based IAG said on January 9 that Aer Lingus rejected an offer worth €2.40 per share, which valued the Irish company at €1.28bn.
Buying Dublin-based Aer Lingus would help swell IAG’s bank of scarce take-off and landing positions at London Heathrow, Europe’s busiest hub, where British Airways is the number one carrier. The Irish airline would add transatlantic flights and help compete with discount airline Ryanair Holdings Plc.
Representatives for IAG and Aer Lingus declined to comment. A representative for Ryanair did not immediately respond to requests for comment.
IAG, which acquired the former British Midland in 2012 to gain slots at Heathrow, would need to broker a deal with 30% shareholder Ryanair, which saw its own takeover bids for Aer Lingus blocked on antitrust concerns. IAG would also need to come to an agreement with the Government, which controls 25%.
“Becoming part of a larger entity could offer medium-term protection for Aer Lingus,” said HSBC Holdings Plc analysts on January 7.
“With the strongest current trading and most geographic relevance, we think IAG is best placed in Europe to pay for Aer Lingus.”