Fourteen firms, including several international investment houses, have applied for the contract to advise the Government on the sale of Aer Lingus.

The Department of Transport will interview the various groups next month and then draw up a shortlist before awarding a contract. It is understood international investment banks like Credit Suisse/First Boston, Goldman Sachs and Merrill Lynch have expressed an interest, along with the world's largest bank, Citigroup, which has been very active in the aviation industry.

They are up against a number of Irish investment houses and brokerages. Among the brokerages believed to have applied are NCB and Davy. Irish investment houses IBI and AIB Capital Markets are also believed to have submitted applications.

According to sources, the Government is likely to want some kind of international dimension because it hopes US and UK-based investors will subscribe for shares in the airline.

Goldman Sachs prepared the last report on selling equity in Aer Lingus and this may place the firm in pole position. However, firms with a larger presence in the Republic may stand a stronger chance.

Merrill Lynch is believed to have strong prospects although some politicians are nervous about its previous associations with the Eircom flotation.

The contract comes in two phases. First, corporate finance advice will be provided to Minister for Transport Martin Cullen and Minister for Finance Brian Cowen on the most appropriate mechanism for selling Aer Lingus.Advice will also be needed on the timing of any sale.

In the second phase, the winners of the competition will arrange and execute the transaction.

The Government has said it will retain at least a 25 per cent stake in Aer Lingus. Its existing stake will be diluted through the issue of new shares for which it will not subscribe.

Staff currently hold a 14.9 per cent stake and, unless their unions subscribe for the new shares, their stake will be diluted.