British Airways shares rose over 2 percent in early trade following a newspaper report that two Middle Eastern groups considered bidding for the airline earlier this year.

Dubai's Emirates, the focus of speculation in June around a possible bid for BA, said on Monday it still had no intention of bidding for the airline.

We have no intention of bidding for BA (British Airways), an Emirates spokesman said.

At 10:28 a.m., the shares were up 1.3 percent at 432 1/4 pence.

A BA spokeswoman declined to comment.

A source familiar with the situation told Reuters they were not aware that Emirates had ever seriously considering a bid.

The Times newspaper said on Saturday that two Middle Eastern groups looked at bidding for BA but were put off by the uncertainty over its pension obligations.

BA said on Friday its pension deficit had more than doubled to 2.1 billion pounds, at the top end of its expectations.

But it also said it was starting talks with staff to tackle the shortfall, fuelling speculation that if it gets to grips with the deficit it might attract fresh bid interest.

Once this (the pension deficit) is resolved, we believe there is a strong chance BA might be bid for, Collins Stewart analysts wrote in a research note.

BA's slots at Heathrow are worth around 2.5 billion pounds at current market value, and with a free cashflow yield of 8 percent, a bid in excess of 6 pounds a share would not be unreasonable, they wrote.

At least 51 percent of British Airways equity must be British owned under the airline's ownership rules.

(Additional reporting by Mark Potter and Anshuman Daga)

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