The initial public offering of Aer Lingus is expected to raise about €660 million giving the Irish state airline a market value of about €1.1 billion, sources familiar with the matter said this evening.
As part of the IPO in London and Dublin, Aer Lingus will issue 200 million new shares while the Government will sell 75 million shares, the sources said.
The price range for the flotation is due to be announced in the morning but the sources said the mid-point was expected to be approximately €2.40 a share.
It will be the first flotation of an airline on the London Stock Exchange since easyJet six years ago and comes amid fears about airline security and high fuel prices.
Based on the mid-point offering price, Aer Lingus will raise about €500 million with the rest coming from the sale of part of the government's existing 85 per cent stake.
The government will retain around 25 per cent while the Employee Share Ownership Trust (ESOT) will keep its 15 per cent stake.
Aer Lingus will use about €400 million of its proceeds to fund the group's €2 billion fleet expansion plans and €104 million will go to help plug a gap in the carrier's pension fund, one of the sources said.
Aer Lingus, which has realigned itself as a low-cost carrier since a brush with bankruptcy in 2001, views the IPO as crucial to plans to expand its fleet, particularly the long-haul arm that is seen as key to its future.
Shares will be offered to domestic and international institutions. The public in Ireland and the UK will be allowed to buy, but a minimum subscription of €10,000 will apply.
The partial sell-off, long a hot political issue in Ireland, has been dogged by problems, including a row between management and unions over the pensions shortfall.
Unions at the airline remain opposed to the privatisation, fearing it threatens the job security of members.
The Government is being advised on the IPO by Allied Irish Banks and Swiss broker UBS AG, while Aer Lingus has retained Dublin-based Merrion Capital and US investment group Goldman Sachs.