International Airlines Group has confirmed that it has had an offer for Aer Lingus rejected.
Shares in the Irish airline soared by as much as 19% as reports emerged that IAG was preparing a bid for the carrier.
An IAG statement confirmed that a proposal had been submitted and rejected.
The statement said: “IAG notes the recent movement in the share price of Aer Lingus and confirms it submitted a proposal to make an offer for the company, which has been rejected by the board of Aer Lingus.
“There can be no certainty that any further proposal or offer will be forthcoming.
“A further statement will be made if and when appropriate.”
A deal would give IAG a significant increase in valuable take-off and landing slots at Heathrow.
However, any deal would have needed the backing of Ryanair, which holds a 29.9% stake in Aer Lingus, and the Irish government, which has a 25% shareholding.
Aer Lingus is the third largest airline at Heathrow. Last month it increased its profit forecast for the full year after a rise in the number of passengers taking long-haul trips as Ireland’s economy returned to health.