(Reuters) - Flybe Group Plc's FLYB.L shares surged 40 percent on Monday after the Sunday Telegraph reported that Richard Branson-founded Virgin Atlantic and British Airways owner IAG ICAG.L will battle it out to buy the regional airline.
Flybe has been in talks with multiple parties to sell itself as it grapples with falling demand, higher fuel costs and a weak British pound. On Friday it said Virgin was a potential buyer.
IAG is a frontrunner in the race to buy Flybe, the Sunday Telegraph reported on Saturday, citing industry sources. Sky News had previously reported that Stobart Group STOB.L was also a likely suitor.
Flybe declined to comment when contacted by Reuters on Monday, while IAG did not immediately respond to a request for comment.
Flybe has also said it would consider other options besides a sale, such as further reductions in capacity and costs.
IAG shares were last up 1.4 percent at 657.4 pence at 0840 GMT.
Reporting by Noor Zainab Hussain in Bengaluru; Editing by Sai Sachin Ravikumar
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