FL Group has been steadily raising its stake in the UK airline

FL Group, owned by Icelandair boss Hannes Smarason, raised its stake in the airline by 1% to 15%.

On Monday, FL agreed to buy low-cost Nordic airline Sterling, fuelling rumours it would up its Easyjet stake.

Easyjet's shares surged on the claims on Tuesday, however, they fell 4 pence to 296.5p as FL confirmed the deal.

Family stake

Commentators believe that FL's �130m purchase of Sterling will make buying the Luton-based airline more important for the Icelandic firm.

Despite adding a further 46 destinations to Icelandair's 22, the expansion leaves it well behind industry leaders Easyjet and Ryanair.

But analysts have warned any takeover move would be tricky as Easyjet's owner Stelios Haji-Ioannou and his family are reluctant to sell the 40% stake they hold in the business.

And back in August, Mr Smarason played down claims he was lining up a bid for the UK airline after FL increased its stake in the firm to 13%.