A £1BN takeover of Aer Lingus by the owner of British Airways has moved closer after the Dublin-based carrier backed a deal.

The Aer Lingus board says it is prepared to accept a sweetened offer worth £1.90 a share from International Airlines Group (IAG).

However, the agreement now hinges on major shareholders Ryanair and the Irish Government.

IAG, which owns Spanish carrier Iberia, said it plans to operate Aer Lingus as a separate business with its own brand, management and operations.

It wants the Irish carrier to join the Oneworld Airline Alliance, of which British Airways and Iberia are members, and become part of a joint business IAG operates over the North Atlantic with American Airlines.

The FTSE 100-listed company said its proposal would secure and strengthen Aer Lingus' brand and long-term future, while offering significant benefits to the Irish company and customers.

It added: "IAG recognises the importance of direct air services and air route connectivity for investment and tourism in Ireland and intends to engage with the Irish Government in order to secure its support for the transaction."

The Irish Government holds a 25 per cent stake in Aer Lingus and will want reassurances from the BA owner over its plans for the key Dublin to Heathrow route.

It is thought Ryanair, which owns just under 30 per cent of Aer Lingus following a series of failed takeover attempts, may be tempted to sell at the new offer price of 2.55 euros a share, which is equivalent to £1.01bn.

The Aer Lingus board previously rejected proposals from IAG worth 2.30 and 2.40 euros a share.

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