Consultants appointed by the Minister for Public Enterprise, Ms O'Rourke, have recommended the partial flotation of Aer Rianta "as soon as practicable".

In a long-awaited report on the future of the State-owned airports' authority and on other aviation matters, London firm Warburg Dillon Read said an initial public offering on the stock exchange would provide access to development and investment capital for the company.

Presented to the Cabinet yesterday by Ms O'Rourke, the Review of Strategic Options for the Future of Aer Rianta report appears to clear the way for flotation as sought by its board in a report last year.

While Aer Rianta has sought a flotation of up to 49 per cent, Ms O'Rourke is believed to favour floating about 30 per cent in 2002. The Government is likely to be asked to sanction this within the next three weeks.

Recommending an initial public offering of stock - but not stating how much of Aer Rianta should be floated - the report ruled out debt and asset disposals as "unattractive or inadequate".

But the consultants questioned Aer Rianta's projections for the investment required for its capital investment programme, which is put at £520 million (€660 million). Warburg suggested £166 million of this merited re-examination.

Asked whether Aer Rianta would be prepared to reconsider aspects of its investment programme, chief executive Mr John Burke said it would. "But I wouldn't say we're starting off from having an over-ambitious capital programme."

The report also questioned Aer Rianta's passenger number projections, saying forecasts for Dublin and Shannon airports were "ambitious" and the one for Cork hinged on airlines introducing new routes, which the airport's captive population "may not support".

Mr Burke said: "We're not hugely apart on those things. We would always want to take a prudent approach on these issues."

While the report recommends selling Aer Rianta's eight hotels in the Great Southern group, it said the company should continue to operate in international markets. The report made a brief assessment of suggestions that either Cork or Shannon airports should be sold to promote competition, but made no specific recommendation.

In addition, it said the long-term outlook for the State's regional airports was uncertain. "The fact that these airports have a mixed profit performance during a period of very positive growth in the air transport sector underlines the difficulty they face in the long-term."

The full text of the report can be read on The Irish Times website at www.ireland.com.