Aer Lingus could be given funds to purchase UK carrier BMI if the loss-making Irish airline entered into a takeover deal with Ryanair, Michael O'Leary has said.

"Why couldn't Aer Lingus buy BMI and expand at Heathrow?'' the Ryanair chief executive asked.

German carrier Lufthansa is expected to sell BMI within the next year, attracting interest from several European network carriers, includ­ing British Airways.

O'Leary said under a "merger'' arrangement with Ryanair, Aer Lingus could be the vehicle to purchase BMI, which owns 11% of all Heathrow slots.

"It would allow them to expand at Heathrow, to get the slots. They could double in size under some of the things we could help them do,'' O'Leary said in an interview.

The Ryanair boss said Aer Lingus could fly into primary airports like Heathrow and Charles de Gaulle, with Ryanair servicing secondary airports.

He said the Aer Lingus board currently had no strategy and net cash at the airline could run out as soon as the end of 2010.

O'Leary said Ryanair may move on a special dividend if current negotiations with Boeing on new planes collapse by year end.

"We can do either; I'd rather grow but we'll see."

He said if new aircraft were not bought, cash at Ryanair could climb from €2.5bn to €4bn by 2012.