Aer Lingus rejects takeover bid from British Airways owner IAG

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

Aer Lingus aircraft is pictured on the apron at Belfast International Airport in Belfast, Northern Ireland, on December 1, 2008 (GETTY IMAGES)

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