The expression of interest in the State-owned airline emerges amiduncertainty about the Government's immediate plans for the operator

With war looming in Iraq, the emergence of Texas Pacific as a potential bidder for Aer Lingus comes as the airline industry prepares for yet another bout of extreme uncertainty.

Highly susceptible as the industry is to political and economic upheaval in the global arena, its short-term performance will depend on the duration of any military campaign in Iraq and the extent of any fallout in Europe or the Middle East. This alone is likely to put brakes on moves in the immediate term to privatise Aer Lingus.

But talks on the still-incomplete pay agreement between unions and employers are believed to be another stalling factor on moves to sell the airline.

The Government is considered reluctant to jump-start any sale process in advance of a new partnership pact being finalised. Though few doubt the Government's intentions, privatisation talk and partnership talks are seen as mutually exclusive.

Still, Texas Pacific is believed to have expressed tentative interest during recent exploratory talks with Department of Transport officials in acquiring part of Aer Lingus. According to one informed individual, the private equity group is being advised by Citigroup, the former Soloman Smith Barney.

If this indicates that the State airline is very much in play, it must be noted that the process is at an early stage only. The Government has yet to appoint corporate finance advisers.

The most striking aspect of the latest development is that the principal figure in Texas Pacific, Mr David Bonderman, also happens to chair Ryanair. Given the traditional rivalry between the two, this is intriguing.

But Mr Bonderman holds nothing near a controlling stake in Ryanair, so his apparent interest in Aer Lingus, at this stage, is not seen as a move to join the two businesses.

His shares in Ryanair were worth €46.43 million at yesterday's closing price, but the stake is small, equating to a little less than 1 per cent of the carrier.

Although Texas Pacific was previously a major shareholder in the airline, this has been diluted and the group is no longer listed in Ryanair's annual report as holding more than 3 per cent of the carrier.

A Texas Pacific spokesman said last night that he had no comment to make.

Yet the development is in line with Mr Bonderman's previous interest in Irish business, which does not end with Ryanair.

Though unsuccessful in an attempt last year in the bidding war for Jefferson Smurfit Group, his group was a significant investor in AerFi, the former Guinness Peat Aviation.

The Texas Pacific expression of interest in Aer Lingus emerges amid uncertainty about the Government's immediate plans for the State-owned company.

For one thing, the airline's very vulnerability to international volatility is one of the principal factors behind efforts to sell it off. With State hand-outs ruled out by the European Commission, Aer Lingus managers and certain Cabinet members are understood to be strongly in favour of privatisation as the only means of securing new capital.

In addition, there is a strong commercial rationale behind such a strategy. Costs are likely to creep upwards in Aer Lingus when a pay freeze finishes at the end of February. The company is believed to be facing four separate claims, which have the potential, if granted in full, to add some €34 million to the bottom line this year. With the airline turning an operating profit in excess of €45 million last year, these would eat into profits, stalling the recovery programme introduced after the attacks on the US on September 11th, 2001.

Still, Aer Lingus expects to complete a fleet review in April, when it plans to start reducing by half the number of plane types it uses. This will boil down to a straight choice, based on costs, between Boeing and Airbus. This might well lead ultimately to a reduction in expenditure on maintenance.

Alone, however, it will not ease relentless pressure on costs. Yet such pressures are inevitable given management's commitment to a strategy in which the only way to grow the airline is to cut fares. While this imposes a heavy requirement to continue cutting costs, such decisions will become increasingly difficult as time goes on.

This is why certain airline and Government figures are keen to go to the market sooner rather than later. After all, the history of Aer Lingus shows that it has managed to survive threats to its viability only to become distracted once the pressure eased.

With pay claims coming down the line, the airline is believed to have sought clarity from the Government about its plans. Yet no decisions are expected in the immediate sense, pending completion of the partnership talks and with regard to the rapidly developing situation in the Gulf.

Meanwhile, any group running the rule over Aer Lingus will have to wait. With a strong brand and valuable slots at Heathrow airport in London, interest is not likely to be confined to Texas Pacific.

Whenever the process begins, the relations between any potential buyer and with Aer Lingus's testy trade unions will be crucial.

Staff will hold 14.9 per cent of the airline once an employee share ownership trust is established. Some accounts state that there has already been a tentative engagement between the unions and Texas Pacific, although one senior union figure dismissed the claim. Either way, there will be no sale without union support.