easyJet has reached an agreement in principle over a potential £5.2 billion takeover.

Media reports suggest that the low-cost airline has reached the agreement with US investment firm Castlelake, although no deal has yet been confirmed.

easyJet said its board would be minded to recommend an offer of £6.90 per share if a formal bid is made, according to the BBC.

The airline, which operates flights from the Isle of Man to destinations including Liverpool, London Gatwick and Bristol, had previously rejected four lower offers from Castlelake, arguing they had undervalued the business.

Before any takeover can proceed, Castlelake must secure regulatory approvals and confirm a firm intention to make an offer by August 3.

The proposal would also require shareholder approval.

The Financial Times says that one of the biggest hurdles facing the deal is European Union ownership rules, which require airlines such as easyJet to remain majority owned by European interests.

Castlelake has previously outlined plans for how it would seek to comply with those requirements,

easyJet is one of Europe's largest airlines, employing more than 19,000 people and operating around 1,200 routes across 35 countries.

The airline has said its share price has come under pressure in recent months, partly because of wider uncertainty affecting the travel sector.

In a statement announcing the agreement in principle, the airline said Castlelake had expressed its 'tremendous respect for easyJet and its people' and its intention to support the company's future growth if the takeover proceeds.

Just last month, easyJet announced its first international route and package holidays from Ronaldsway to Geneva, which is known as the gateway to The Alps.