The International Airlines Group (IAG) wants to buy Aer Lingus, according to reports in Ireland.
The company, formed by British Airways and Iberia after their recent merger, was also recently linked to a potential tie-up with soon-to-be-merged LAN Chile and Brasilian airline TAM.
Rumours about potential acquisition targets have been rife since BA chief executive Willie Walsh told a press conference in Mumbai last week that IAG could acquire up to 12 airlines in the future.
Airline sector analysts have said the consolidation of carriers is inevitable if the industry is ever to become profitable.
Irish anti-trade budget airline Ryanair made two failed bids to takeover Aer Lingus last year, but it was blocked by Ireland's competition regulators and the government.
Ryanair currently owns 29% of Aer Lingus, but according to reports from the Emerald Isle, the government has suggested it will only sell its 25% stake in the airline once Ryanair is out of the running.