In a statement by the airline it confirmed it was "reviewing its options" in respect of Flybe but stressed that there was no guarantee an offer would be made.
Flybe, which in Ireland operates flights from Dublin, Cork and Belfast, last week put itself up for sale.
Flybe, which flies 76 aircraft, has a market capitalization of about £20.8 million ($26.68 million), according to IBES data from Refinitiv, after its shares fell over 50 percent this year.
"Virgin Atlantic Airways Limited is one of the parties [Flybe] is in discussions with as part of the formal sale process announced on 14 November 2018". The British carrier is the largest regional airline in the world.More news: New Range Rover Evoque offers Land Rover's first 48V MHEV system
"Flybe has a fine suite of slots across the United Kingdom, particularly at Heathrow".
Virgin's last venture into domestic operations, the Little Red airline launched in 2013 linking London, Manchester and Scotland, proved shortlived, abandoned in 2015 after most services flew half-full.
Flybe has 78 planes operating from smaller airports including Birmingham, London City, Southampton and Norwich, and flies to destinations across the United Kingdom and Europe.
Should it buy Flybe, Virgin Atlantic will be able to feed passengers from regional airports to its worldwide network out of Heathrow and Gatwick, London's biggest airports.More news: Trump Asks Top Court to Skip Protocol, Immediately Consider Trans Military Ban
Virgin Atlantic is being advised by Rothschild & Co, while Evercore is acting as financial adviser to Flybe and Numis and Liberum as broker to Flybe.
Responding to media reports about the talks, Flybe said: "There can be no certainty that an offer will be made, nor as to the terms on which any offer will be made".
Over past 18 months both Monarch and Primera have disappeared from British skies, with rising fuel prices putting pressure on the sector.More news: Barcelona unable to sign Liverpool players for the next two seasons