Struggling low cost airline Flybe’s shares soared 23 per cent this morning as it confirmed reports that Virgin Atlantic is in talks to buy it.
Billionaire Sir Richard Branson’s airline began talks to buy the company after the Exeter-based airline put itself up for sale earlier this month, Sky News reported last night.
Shares later balanced out at five per cent up, though its current stock value of 9.6p is still far off late October's 14p.
"There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made," Flybe said.
Virgin Atlantic stressed the same point, adding that "it is reviewing its options in respect of Flybe which range from enhanced commercial arrangements to a possible offer for Flybe", with which it has an existing trading and code-sharing relationship.
Rothschild is advising Virgin on the bid.
Sir Richard's company saw the takeover as a chance to boost passengers on its long-haul network and also access take-off and landing slots at Heathrow Airport reserved for domestic flights, Sky said.
Easyjet and infrastructure company Stobart Group are also thought to be vying to buy Flybe, though Easyjet's boss ruled a purchase out in a media conference last week.
Flybe started looking for a sale earlier this month after profits dropped 54 per cent in the six months to the end of September.
Higher fuel prices, weaker sterling and a drop in customer demand affected the airline, while it has committed to leasing Embraer jets between July and December next year, costing it $114m (£88.5m).
Shares in the airline halved last month when the company issued a full-year profit warning, ahead of its half-year results last week.