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 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.

Meanwhile, 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.

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)