Aer Lingus is working on plans to launch its first long-haul route to the east regardless of the planned privatisation of the company, the airline's chief executive indicated yesterday.Emmet Oliver reports.

Dermot Mannion, a former president (group support services) at Dubai-based airline Emirates, said privatisation was likely to happen before the end of 2006, but this would not prevent route developments taking place between now and then.

"In the meantime we have a strategy internally for long-haul route development and we are hopeful that soon we will be able to announce some activity for 2006," he said.

Asked what aircraft might be used for the new eastward route, Mr Mannion said the company might lease more Airbus aircraft.

"We are looking at options, but failing that, we are still very keen to move on long-haul expansion so we are looking at some juggling from within our existing fleet to see what we can do."

Asked would the airline lease additional planes, he said: "If we can find additional capacity for 2006, we will lease it in. But we are seeking to open at least one new long-haul route in 2006, even if we cannot find additional capacity."

He declined to say what the new route was, but most sources believe it will be to Asia or Australia, although the Middle East has not been ruled out. However Gulf Air is planning to offer the first direct Irish flights to the Middle East. Mr Mannion said he would not be surprised if his last employer, Emirates, decided to offer flights from Ireland. He said it was important Aer Lingus achieved "first mover advantage" on long-haul routes to the east.

He said these developments were contingent on a new agreement with cabin crew. But he said the decision to scrap the company's route to Florida was now irreversible.

He said new long-haul routes could go ahead, regardless of the privatisation question.

"One of the things I've been at great pains to say internally, because there has been some concern that maybe the whole privatisation agenda will take over everything else, is that we are not allowing that to happen. We are making the business decisions that we would have been making anyway," he said.

He said the uncertainty was not ideal, because the airline needed new funds to grow its fleet, but he said the business could not stop and wait for others to take advantage of the opportunities. "But in the interim, by juggling here and there we can create one opportunity in 2006. We need to do that from a competitive standpoint."

He said the company's profits were likely to be down significantly in 2005, mainly because of fuel prices. He said, however, revenue was remarkably strong.

"Clearly we and the rest of the industry are hurting very, very badly on fuel prices. For instance if you look at the business plan which was put in place three years ago, fuel prices today are almost exactly 100 per cent more than was envisaged in that plan."

He referred to comments made a few months ago to the effect that operating profits would be halved in 2005 from €107 million in 2004, but the position had now improved, he said.

Asked about the threat of a pensions deficit at Aer Lingus, he commented: "Yes there is an issue to be resolved on pensions. One of the complications of course is that it isn't just an Aer Lingus pension scheme. There are other entities involved. There is some decoupling necessary anyway, to resolve. But I wouldn't say it was an insurmountable problem and that issue is being worked on."

Mr Mannion was speaking after addressing the monthly meeting of the Leinster Society of Chartered Accountants.