Aer Lingus has confirmed that it is in talks with regional airline Aer Arann about franchise arrangements on services between Ireland and the UK.

The airline issued a statement to the stock exchange in response to a report in the Irish Times. The paper said the airlines were in advanced talks about an alliance which would see them operate joint flights from provincial UK cities to Dublin and Cork.

The report said it was understood Aer Arann would operate feeder services on behalf of Aer Lingus from certain UK cities to its main Irish bases at Dublin and Cork, in a form of code sharing which is common in the airline industry.

The paper said any deal would not involve Aer Lingus's taking an equity stake in its rival. It added that a deal would allow Aer Lingus to supplement its services between Britain and Ireland at a lower cost than by expanding its own services.

Aer Lingus said a further announcement would be made 'as appropriate'.