The Government is on the point of making a decision in principle to privatise part of Aer Lingus, although there is still no agreement on the timing or scope of the sale.

None of the ministers at a crucial Cabinet subcommittee meeting yesterday argued in favour of State investment in the airline, it emerged last night.

As Fianna Fáil and the PDs last night changed their tone in the debate, a spokesman for the Taoiseach, Mr Ahern, said that "there were never any differences over Aer Lingus" between the Coalition partners.

The meeting was described as "very good" by a spokesman for the Tánaiste, Ms Harney, only days after she acknowledged "differences of emphasis" within the Government on the airline's future.

The Cabinet will make its formal decision on ownership before Christmas after ministers decide whether to sell part or all of the company or a majority stake in it.

A stock market flotation is seen as the most likely option at this stage, although not all ministers are convinced that the State should float a minimum of 51 per cent of the airline.

The release of such a stake, which would give private investors overall control of the company, would increase the price the Government could command in the market.

This may yet emerge as an important factor in the debate, because the resignation last week of the chief executive, Mr Willie Walsh, has depressed the airline's valuation.

The subcommittee meeting was prompted by Mr Walsh's departure, and that of the chief operations officer Mr Seamus Kearney and the chief financial officer Mr Brian Dunne.

The Government wants to advance its discussions quickly to provide clarity on the airline's future direction before the process of recruiting a successor to Mr Walsh begins.

It is also recruiting a permanent chairman to replace Mr John Sharman, whose mandate as temporary chairman ends at the start of the new year.

Failure to reach a decision on ownership in the short term would damage the prospects of recruiting experienced business figures for the chairmanship and the post of chief executive.

Despite the Government moves to prioritise its discussions on Aer Lingus, sources said yesterday that a decision to sell a stake did not necessarily mean that a sale would follow in the short term.

It is understood that the credibility to the stock market of the incoming chief executive is seen as a crucial factor in determining whether a sale in the first half of 2005 is possible.

While timing will also be influenced by stock market conditions and the state of the airline industry generally, it is recognised that the privatisation might not take place until after next year.

However, the Government will be free to initiate the process whenever it wants because it is empowered under existing legislation to sell its stake.

Speaking in Dublin yesterday, Mr Ahern indicated support for the current business plan at the airline.

He said: "we have a work programme that has to be implemented".

Mr Ahern did not repeat his attack on the management team but said he saw the retention of large-scale employment in the airline as a long-term strategic issue.

Mr Walsh and his colleagues gave six months' notice of their resignation last week after they sensed increasing Government "unease" at the direction and pace of their plans for the company.

The Labour leader, Mr Rabbitte, last night claimed the Government's stewardship of the airline had been incompetent.

He told Labour activists in Carlow-Kilkenny that Mr Walsh and his colleagues had resigned because they were finding its impossible to work with a Government that could not decide what it wanted to do with the airline.