The Government is expected to move quickly to appoint a successor to the Aer Lingus chairman, Mr Bernie Cahill, who died suddenly on Friday.

While conscious of the sensitivity of the situation, senior figures are keen to avoid the emergence of a vacuum at the highest levels in the State airline.

Aer Lingus has no deputy chairman and Mr Cahill's death means that the two most senior positions in the airline are now vacant.

The company is projected to lose £20 million (€25.4 million) this year and its notional valuation is believed to have declined by £200 million to about £300 million since the start of the year.

The company has not yet appointed a chief executive to succeed Mr Michael Foley, who was sacked in June after a board subcommittee upheld two complaints of sexual harassment against him. Mr Foley denied the allegations.

In addition, acting chief executive Mr John O'Donovan has indicated that he would not go for the permanent position.

While the process of recruiting a chief executive is said to be well-advanced, the Government is expected to appoint a chairman first.

That process has not commenced yet, but it is thought an appointment might be finalised before the Cabinet meets again September 5th. However, Cabinet approval per se is not necessary to make the appointment.

While the Minister for Public Enterprise, Ms O'Rourke, has responsibility for Aer Lingus, the Taoiseach, Mr Ahern, is expected to consult the Tβnaiste, Ms Harney, and the Minister for Finance, Mr McCreevy, before the appointment is made. It is thought that people from outside the airline will be recruited to both positions.

An Aer Lingus director, Mr Des Richardson, has been mooted as a possible successor to Mr Cahill as chairman. However, informed figures believe Mr Richardson, who is close to Mr Ahern, is unlikely to be approached.

The position of chief executive has not been advertised by Aer Lingus. It is understood that two candidates are regarded as favourites.

Mr Cahill was chairman of the subcommittee set up to hire a chief executive, and this was a role he took when that position was vacant in the past.

Figures familiar with the airline have said Mr Cahill's death would not halt the development of an amended business plan, set to be put to the board at its next meeting. The company is likely to cut back on capacity because bookings have fallen sharply since the start of the year.

Implementing such a plan may yet provoke difficult with the company's trade unions, who have stopped work over pay on five days in the past year.

The appointees to the positions of chairman and chief executive will face other significant challenges at the troubled company.

As well as trading difficulties prompted by poor industrial relations, slower US demand and the foot-and-mouth outbreak, Aer Lingus may yet be put on the open market by the Government.

It is expected in the autumn to reassess its decision to float the company on the Stock Exchange.

Amid internal difficulties at Aer Lingus and the poor performance of the "full service" airline business internationally, that process has been all but abandoned.

Given the scale and complexity of the problems at Aer Lingus, the Government knows a strong, pragmatic chairman will be needed to guide it into the private sector.

The company was a significant beneficiary of State aid during its last crisis. While it returned to profits under a rescue plan developed by Mr Cahill, further State aid has been ruled out by the European Commission.