AER Lingus is considering a sweetened £1bn takeover offer from British Airways' owner.

The Dublin-based carrier's board is expected to back the latest proposal from International Airlines Group (IAG), which values Aer Lingus at £1.01bn.

As well as a recommendation from the Aer Lingus board, the company said IAG's offer was conditional on the support of major shareholders Ryanair and the Irish Government.

The Irish Government holds a 25 per cent stake in Aer Lingus and Ryanair 30 per cent.

Aer Lingus directly employs 3,900 people, mostly in Dublin, with 2,100 described as ground staff in areas such as clerical, operative and back office roles.

Meanwhile, turnaround plans at fellow carrier Flybe have suffered a setback after the regional airline warned full-year results were likely to be weaker than expected.

The firm revealed revenues fell 3.8 per cent to £126.8m during the final three months of last year, adding it does not expect to make a profit in the financial year to March 31.

The airline is one year into a three-year turnaround plan, which has seen it cut more than 1,000 jobs and unprofitable routes after seeing passenger numbers fall in the wake of the financial crisis.

It reduced seat capacity by 6.1 per cent to 2.5 million in the third quarter of its financial year but the need to keep fares low has resulted in a 5.2 per cent reduction in its passenger yield to £67.65.