Aer Lingus is considering a revised offer worth €1.36 billion from British Airways owner IAG.
The Irish carrier is reportedly considering a deal of €2.55 per share up from €2.50 a share.
IAG, which also owns Spanish carrier Iberia, has had two takeover proposals rejected by Aer Lingus.
Any deal would require the approval of Ryanair, which owns a 29.8 per cent stake in Aer Lingus, the Irish government, which has a 25 per cent stake, and the European Commission.
One of the main attractions of the deal for IAG is Aer Lingus’ valuable take-off and landing slots at British Airways’ main base at Heathrow. The Irish carrier is the third largest airline at the airport.
The offer comes a week after Aer Lingus published its annual traffic results in which it saw passenger numbers rise by 3.2 per cent year-on-year.
However, in the month of December traffic dropped by 705,000 due to an 8.2 per cent fall in short-haul numbers to 517,000 compared to the same period in 2013.