Ryanair has increased its stake in Aer Lingus to more than 25 per cent after buying yet another chunk of the former State airline yesterday, market sources said.

It is believed that Ryanair, which last month made a €1.4 billion takeover offer for its Irish rival, yesterday acquired a further 31 million shares in Aer Lingus, equal to 6 per cent of the company, adding to the 101 million it already held. A spokeswoman for Ryanair declined to comment on what she called "market rumour" and Aer Lingus was also unable to shed any light on who had bought the stock.

Following Ryanair's €2.80 a share offer for Aer Lingus on October 5th, shares in the former State airline rose as high as €2.98 and stayed above the offer price until November 8th. Under Irish takeover regulations, Ryanair was forbidden to buy any more stock while the shares traded above its offer price, thus preventing it from increasing its stake for the first five weeks of the offer period.

Yesterday is believed to be the first time Ryanair has sought to increase its stake since the offer.

It is unclear at what price the shares were bought, though at yesterday's closing price of €2.72, 31 million shares would have cost Ryanair about €84 million.

In total almost 34 million Aer Lingus shares changed hands yesterday, with the large trade coming at the very end of what had been a relatively quiet day for the stock.

Overall the shares closed up 5 cent, or 1.9 per cent, at €2.72.

The decision by Ryanair chief executive Michael O'Leary to increase his stake in Aer Lingus is believed to be his way of showing the group's management he isn't going away, despite the likelihood that the takeover offer will fail.

Last week members of the Employee Share Ownership Trust (Esot) voted overwhelmingly against the bid, a move that is believed to have spelt the end for Ryanair's Aer Lingus plans.

Still, with a 25 per cent stake in the group, Mr O'Leary or his representatives are likely to attend annual general meetings of Aer Lingus and may well take the opportunity to oppose major strategic decisions of the company. Following its flotation in September, and the ensuing offer by Ryanair, Aer Lingus has been left with an eclectic range of shareholders from businessman Denis O'Brien and the Government to its own pilots.

If the offer period lapses on December 4th - as is widely expected - Ryanair will have to wait another 12 months before making another bid.