The enthusiasm with which Aer Lingus is trumpeting its problems is perhaps the most alarming thing about the crisis facing Ireland's national carrier. It is matched only by the pessimism that seems to be gripping the normally upbeat Minister for Public Enterprise.

Yesterday, Ms O'Rourke painted the bleakest picture yet of the airline's fortunes. "Aer Lingus advised on 17 September that on the basis of the information on forward bookings available to them at that stage, they now expected losses to rise to £70 million for 2001 and in excess of £100 million in 2002. They were facing a grave cash situation and in fact were likely to run out of cash in early 2002," the minister told the Dβil.

But what of the £650 million (€825 million) cash sitting in Aer Lingus's bank account at the start of the year? No joy there, according to the Minister. Some £350 million of this is held in deposit accounts and can only be used to repay aircraft loans and leases.

The Department of Public Enterprise has asked Aer Lingus to explore the possibility of freeing up some of the £350 million, but has been told that at best only £30 million is available. The remaining £300 million has now fallen to less than £185 million due to capital expenditure and trading losses and will run out by February.

The Minister's downbeat assessment came the day after SIPTU - the biggest union at Aer Lingus - discussed the crisis at its annual conference in Tralee. Not surprisingly, the meeting passed a motion calling on the Government to provide "immediate and urgent financial assistance" to the airline.

The Minister was also less than optimistic on this topic yesterday. While noting that the Belgian and Swiss governments had put together rescue packages for their national carriers, she did not hold out the prospect of a similar option for Aer Lingus.

The issue will be discussed at the next Transport Council meeting on October 16th, she said. "If some limited form of compensation is proposed, I believe that it would only be supported on the basis that it would be made available on a non-discriminatory basis to viable airlines under guidelines agreed at European level and in respect of specific categories of loss associated with the events of 11 September," she said.

The Minister's position contrasts starkly with that of her Belgian counterpart Mr Rik Daems, who stepped in on Wednesday with a €125 million (£98.45 million) loan for Sabena. The Belgian government has made it clear that it is prepared to do what is required to save its national airline and deal with the legal consequences further down the road.

It is hard to believe that the Irish Government - which is seeking re-election next spring - will not follow the Belgians' lead. But it has not yet come to that and there are grounds for hope that such intervention will not be required.

The body language suggests that Aer Lingus - with the tacit support of the Government - is deliberately casting its prospects in the worst possible light.

Not only is this prudent in the current uncertain environment, it also strengthens its hand in the restructuring process now under way.

The Government's reluctance to get drawn into the debate about state aid in the wake of the rescue of Sabena and Swissair is perfectly understandable in this context. Once the unions sense a real prospect of Government cash, the Aer Lingus management will be undermined.

At present Mr Tom Mulcahy, the Aer Lingus chairman and former AIB chief executive, would appear to be trying to capitalise on the airline's difficulties to force through a reorganisation that would have been inconceivable prior to September 11th.

The rationalisation plan that was drawn up prior to the attacks on New York and Washington was designed to yield savings of £25 million from fleet reductions, improved operational efficiency and reduced overheads. Capacity cutbacks would be confined to European routes and there was no talk of significant job cuts.

Cutting operations by 25 per cent and shedding up to 1,700 jobs - possibly more if some sources are correct - would have been a non-starter at that stage. Now it is a necessity if the company is to remain solvent and have a long-term future.

The Government cannot afford to blink on the state aid issue.