The remuneration package to be paid to Mr Bernie Cahill, who was appointed executive chairman of Aer Lingus this week following the unexpected departure of chief executive Mr Gary McGann, has yet to be negotiated. And the package which will be on offer as the group seeks a new chief executive has also still to be decided.

Mr Cahill held the post between 1993 and 1995, when he was paid the same rate as the chief executive he had replaced, Mr Cathal Mullan.

However, Mr Mullan's remuneration had been within the limits set out in the Gleeson guidelines for salaries in the public sector. Mr McGann's remuneration was over and above the limits set out in the guidelines and has never been disclosed. It is understood to be been more than £150,000. Under the guidelines, a chief executive of Aer Lingus should receive a maximum of approximately £105,000.

Mr Cahill's remuneration will have to be agreed between Mr Cahill and the Department of Public Enterprise. Aer Lingus is hoping to find a new chief executive within three to four months. Once the position is filled, Mr Cahill will then revert to his role as chairman of the company, a position for which he is paid about £5,000.

Whether new applicants for the post of chief executive can be paid over the limits set out in the Gleeson guidelines has not yet been decided and will be the subject of negotiations between the company and the Minister for Public Enterprise, Ms O'Rourke. New guidelines are likely to be introduced when a study by Hay Consultants - which will recommend pay levels for commercial semistate chief executives - is completed later this year. It is being undertaken as part of the Government response to the Buckley report, which recommended a new regime to replace the Gleeson guidelines.

Any decision to breach the existing guideline would have to be approved at Cabinet, while it does not appear that the new guidelines will be in place by the time the appointment is made.

In a number of cases recently, the government refused to agree a package over and above the guidelines. However, the Aer Lingus post is the first for this Government where the previous incumbent was in receipt of a package above the public sector pay guidelines.

Meanwhile, sources have indicated that negotiations between the Smurfit Group and Mr McGann were conducted personally by Dr Michael Smurfit and not by Smurfit's chief operations officer, Mr Paddy Wright, who is a member of the Aer Lingus board. Mr Wright offered his resignation to Mr Cahill because of the sensitivity of the situation but Mr Cahill did not accept it.