Mr Gary McGann, Aer Lingus group chief executive, who is moving to Jefferson Smurfit as chief financial officer

Aer Lingus group chief executive Mr Gary McGann is leaving the State-owned operation to become chief financial officer of the Jefferson Smurfit Group. Mr McGann (47) will join Smurfit "when an acceptable timetable has been agreed with his current employer", according to a statement from Smurfit. Industry sources commented that Mr McGann "got an offer he could not refuse". The board of Aer Lingus was informed of Mr McGann's decision yesterday morning.

While airline sources said that Mr McGann was likely to stay on until midsummer to allow his succession to be planned, the SIPTU trade union has called on him to "move on immediately". In a statement, SIPTU official Mr Tony Walsh, who is involved in the protracted TEAM negotiations with Aer Lingus, said the move could not have come at a worse time.

"The last thing needed just now is uncertainty at the helm. Mr McGann has made a decision to move on. He should do so immediately so as to avoid creating a vacuum, which will otherwise become an inevitability."

In letters to the Aer Lingus chairman, Mr Bernie Cahill and the Minister for Public Enterprise, Ms O'Rourke, he said Mr McGann's position "is now untenable".

At Aer Lingus, Mr McGann has a personal contract, the terms of which have never been disclosed. Special arrangements over and above the Gleeson maximum pay guideline of around £100,000 were agreed to encourage him to take the job in July 1994. His annual package is understood to be worth more than £150,000.

Industry sources speculated that at Smurfit his basic salary could be more than £200,000 and would also include potentially very lucrative share options and performance bonuses. In addition, he is likely to be appointed before too long to the Smurfit board, as his predecessor, Mr Ray Curran, was after four years as chief financial officer. Mr McGann was never appointed to the main board of Aer Lingus. He joined Aer Lingus in 1994 from drinks company Gilbey's of Ireland where he was chief executive. The Dublin-born accountant was the third chief executive to be appointed in two years following the departures of Mr Peter Owen, who held the job for 12 months, and Mr Cathal Mullan. When he joined Aer Lingus the operation was struggling in intensely competitive markets with the arrival of new airlines such as Ryanair and increasing competition on the transatlantic and London routes. He has been involved in the implementation of the £50 million "Strategy of the Future" restructuring plan to ensure the survival of the airline.

Sales of assets and the State injection of some £175 million in new shareholders' funds reduced the heavy debt burden, but Mr McGann's operational strategies, including the restructuring of the routes into three key profit centres, ensured a turnaround in the financial performance of the air transport division.

While results for 1997 have not yet been produced, net profits in 1996 were up to £32 million from £15 million in 1995. Reflecting the intense competition in air transport, particularly on the Dublin-London route, profits from this business came back to £42.2 million from £43.6 million.

Mr McGann's term at Aer Lingus included a number of clashes with unions as the group pursued cost reduction or cost containment policies. One of the longest-running and most intractable problems has been TEAM Aer Lingus, where voting on the £54 million package to buy out the workers' letters of comfort was finishing yesterday as the announcement of Mr McGann's imminent departure was made.

At Smurfit, Mr McGann will replace Mr Curran who is going to Chicago to become deputy chief executive and executive vice-president of Smurfit Stone Corporation as part of the merger of the group's US associate, Jefferson Smurfit Corporation, with Stone Corporation.

Mr Cahill said Mr McGann's "most enduring legacy" was that Aer Lingus now had a strong management team in place.