Aer Lingus rejects takeover bid from British Airways owner IAG

Shares soared 21% on speculation that IAG would bid for Irish airline

Irish airline Aer Lingus has rejected a takeover bid by the International Consolidated Airlines Group, the parent company of British Airways.

Shares in the Dublin-based carrier surged by as much as 21 percent Thursday amid rumors of a possible bid.

Those gains were pared after IAG issued a statement confirming its proposal had been rejected by the Aer Lingus board.

Analysts long have seen IAG as a likely bidder for Aer Lingus. IAG chief executive Willie Walsh was previously chief executive of Aer Lingus before the formerly state-owned airline's 2006 privatization.

Aer Lingus operates a substantial European short-haul network and a half-dozen routes to the United States.

In recent years it has struggled to compete with larger Dublin-based rival Ryanair, which has mounted three failed takeover bids.

Additional reporting PA