Shares in Flybe took off yesterday following a weekend media report that British Airways owner International Airlines Group was vying with rival Virgin Atlantic to take over the UK regional carrier.

The speculation sent Flybe shares up by as much as 40%.

IAG is tipped as the favourite to take over the low-cost airline, according to reports in the Sunday Telegraph.

Exeter-based Flybe last week admitted being in talks with multiple parties to sell itself as it grapples with falling demand, higher fuel costs and a weak pound.

Virgin Atlantic was disclosed on Friday as a potential buyer.

Southend airport owner Stobart Group, which failed for a bid for Flybe earlier in the year, has also been linked as a likely suitor.

EasyJet and Ryanair have said they are not interested in buying Flybe.

Flybe has also said it would consider other options besides a sale, such as further reductions in capacity and costs.

More: Flybe confirms talks with Virgin Atlantic