BRITISH Airways is preparing to launch a takeover bid of loss-making Aer Lingus.
The move would see BA boss Willie Walsh regain control of Aer Lingus -- the airline he left in 2005.
Current Aer Lingus boss Christoph Mueller has signalled that the former state airline is considering a number of options at the moment.
Analysts have predicted that the newly formed International Airlines Group (IAG), a merger of British Airways and Iberia, could be poised to make the bid.
The takeover of Aer Lingus by IAG would potentially feed Irish passengers into BA's long-haul network at Heathrow Airport in London, and would strengthen BA's position there.
Insiders have said that the embattled company held informal talks with rival carriers amid speculation that the Government is planning to offload its own stake.
Chief executive Christoph Mueller has not ruled out a majority takeover from a larger airline and said that he would be interested in joining an alliance with other carriers.
And he noted that Aer Lingus is moving closer to reversing its decision to leave the Oneworld Alliance in 2007.
"The issue is definitely on our agenda," he said.
"I believe that consolidation around the three alliances (Oneworld, SkyTeam and Star) will continue."
The alliances allow airlines to co-operate in marketing and selling connecting flights and are a clear departure from the low-cost business model previously entertained by the company.
Budget airline Ryanair already owns a 29pc stake in Aer Lingus and has already made two takeover attempts of the former state carrier, but this has been prevented by competition regulators and the Government.
And Mueller does not believe Ryanair will launch another hostile takeover attempt because Aer Lingus's current share price has become "too expensive for them".
While the Government has indicated its intention to sell its 25pc stake, it will only do so once there is no danger that Ryanair might take advantage -- which could potentially disappear once another large investor steps in.
Earlier, Mr Mueller confirmed that the airline had abandoned mirroring Ryanair's low-cost model and was returning to the business model that most airlines used for decades.
And he said that Aer Lingus could yet consider a plan which would involve further expansion.
Speaking to Aviation Week, he said that the company will receive four Airbus A320s this year and phase out four older ones at the same time.
He pointed out that the firm had a gross cash position of over €1bn at the end of June and made an operating profit in the second quarter.
Aer Lingus may add a second aircraft on the Washington-Madrid route, after the venture with United Airlines turned profitable in five months.