IAG is expected to make an improved bid for Aer Lingus.
According to a report carried in today's The Irish Times, government sources said the group will make further concessions on the airline's Heathrow access in an attempt to get the deal over the line.
Representatives from IAG met with Government officials yesterday and are due to meet again next week.
In a statement issued last night following the talks, the Minister for Transport, Paschal Donohoe, said the Government’s Inter Departmental Steering Group met at the request of IAG, where they discussed the conditions laid out by the Minister to consider the proposal.
It is understood IAG may tackle concerns about jobs and connectivity, in order to convince the coalition to sell the State's 25% share in Aer Lingus.
Today, Transport Minister Paschal Donohoe said the Government's engagement with IAG has been positive so far.
"They are currently looking to mount a so-called 'friendly acquisition' of the company - they haven't displayed any other characteristics to date," he said.
Meanwhile, Aer Lingus passenger traffic dropped slightly last month.
10,000 more passengers were carried on long haul routes, for a total of 56,000 – but short haul traffic decreased by almost 3%.
The airline said it was due to planned network adjustments as a result of seasonal demand. The total number of passengers carried by Aer Lingus last month was 627,000.