The Minister for Public Enterprise, Ms O'Rourke, is expected to propose a timetable before Christmas for floating Aer Lingus. It is understood the Government has not ruled out floating the whole company, in a move which would raise in excess of £600 million (€762 million).
Aer Lingus needs £150 million-£200 million in the short term for funding requirements and it is thought that an IPO (initial public offering) could take place as early as next summer. The Government is said to be keen to float the company while the airline sector remains buoyant.
The strategic alliance which Aer Lingus has signed with British Airways and American Airlines will add £5 million a year to the company's pre-tax profits, the State-owned company said yesterday. It also said that it will launch two new routes from Dublin next April, to Stockholm in Sweden and Munich in Germany.
Aer Lingus, which announced yesterday that it had officially signed strategic agreements with AA and BA, said the alliance would mean enhanced service for customers. It said the move was also a defensive one - because it believes the sector will be dominated by four or five large alliance groupings. Not being in an alliance could knock £20 million off annual pre-tax profits, it said.
Aer Lingus chief executive Mr Garry Cullen said the company was concentrating on business passengers and on quality tourists.
He said the move would mean that the Aer Lingus brand would get much more exposure globally as it would show up on every travel agent's screen when dealing with the Oneworld alliance grouping. This grouping, which Aer Lingus will become a full member of next year, also includes Cathay Pacific (Hong Kong), Qantas (Australia) and Iberia of Spain, Finnair and Lan Chile.
Mr Cullen said agreement for the frequent flyer programmes - which reward customers who fly with airlines by offering them discounts or free flights - will put the Aer Lingus name in front of 30 million American Airlines customers and three million British Airways customers.
Overall, Aer Lingus traffic has increased by 18 per cent in the first nine months of 1999, compared to last year. Business traffic has increased by 23 per cent, while leisure has increased by 16 per cent.
Mr Cullen stressed that the link with American Airlines would also open up Ireland as a destination to many more US customers, boosting the airline's high-yielding transatlantic routes. He said the company would continue its relationships with other airlines, despite the alliances.
Ms O'Rourke welcomed the finalisation of the alliance. She said the airline's new partners were major players at Aer Lingus European and North American gateways. A tripartite group comprising the Department of Public Enterprise, the Department of Finance and Aer Lingus executives and trade union representatives is currently assessing the airline's future funding requirements.
Trade unions representing Aer Lingus staff welcomed the alliance announcement. However, Ms Kay Garvey, secretary of the Central Representative Council (CRC), which co-ordinates the airline's trade unions, said they accepted that funding was needed, but had not reached a conclusion on how much would be required or from where it should come.
The Consumers' Association of Ireland and Ryanair both expressed reservations about the alliance. Ryanair said it would result in higher fares and less choice for Irish passengers travelling abroad over coming years.
The Consumers' Association said these alliances "make it increasingly difficult" if not impossible for other smaller carriers to compete.
