Middle East carrier Etihad has reportedly been approached by Virgin Atlantic about a possible tie up to bid for BMI.
British Airways/Iberia parent International Airlines Group is understood to have put forward an initial offer for loss-making BMI to owner Lufthansa.
BMI’s valuable take off and landing slots at Heathrow are seen to be the main prize in any successful take over.
IAG has already acquired six sets of slots at the London hub from BMI in a move that prompted fury from rival Virgin Atlantic.
But reports over the weekend linked Sir Richard Branson’s carrier with a possible partnership with Abu Dhabi-based Etihad to bid for BMI.
The Middle East carrier is not able to pursue an offer alone because of foreign-ownership rules, the Financial Times reported.
BMI’s pension trustees have reportedly voiced concerns that any deal could have implications for the funding of the scheme and have demanded to be involved with the bid talks.
BA would claim 41% share of Heathrow slots following a takeover but could be forced by competition authorities to make concessions to rivals.