The owner of British Airways said this evening that Aer Lingus had rejected a revised takeover approach valuing the Irish airline at €2.40 per share.

International Consolidated Airlines Group (IAG), which also owns Spanish carrier Iberia, said it had made a renewed approach, lifting the cash offer to €2.40 from its earlier offer of €2.30.

"There can be no certainty that any further proposal or offer will be forthcoming," it said. "A further statement will be made if and when appropriate." 

Aer Lingus said in December it had rejected a takeover approach from its larger rival, which is keen to gain control of its highly coveted runway slots at London's Heathrow Airport. It said the offer undervalued the business. 

Shares in Aer Lingus closed 10% higher in Dublin trade this evening on speculation of a renewed bid.

Buying Aer Lingus would give British Airways more take-off and landing slots at Heathrow, its home base and a top European hub for profitable long-haul routes which is operating at close to capacity, preventing BA from adding more flights.

IAG's chief executive, Willie Walsh, knows Aer Lingus well. He started his career as a pilot there and was the airline's chief executive between 2001 and 2005.

But any acquisition of Aer Lingus would need the backing of Ryanair, which still holds a 29.9% stake in Aer Lingus after three failed takeover attempts, and the Government which owns 25%.