Airline needs investment - Minister

The Minister for Transport, Mr Cullen, has accepted that Aer Lingus needs access to significant investment in the period ahead regardless of which ownership option the Government ends up supporting.

A Cabinet sub-committee is currently studying the various ownership options open to the airline. Last week a report by investment bank Goldman Sachs outlined a series of scenarios and this report will be studied closely by the various Ministers on the committee, including Mr Cullen.

Speaking during a weekend radio interview on RTÉ, Mr Cullen said the Goldman Sachs report set out broad ideas rather than definitive suggestions. He said the withdrawal of an investment proposal by Aer Lingus management helped to make the issues clearer for the Government.

He declined to give his personal view on the airline's future, but said he fully acknowledged the company needed to access fresh investment to open new routes and renew its fleet. He said there was no "quick fix" however to the challenges facing the airline. He also paid tribute to the sacrifice of the airline's workers over recent years.

The Goldman Sachs team were not asked to recommend one solution to the ownership question, but to assess the strengths and weaknesses of various options.

Their report is believed to say that flotation of the airline would be a feasible way to raise badly needed finance, although they do not recommend this option outright. They say flotation could raise more finance for the Government/airline compared to a private placement with institutions or a trade sale to another airline.

Last week Mr Willie Walsh, the airline's chief executive, said he was no longer seeking permission to develop an investment proposal for the airline. The Taoiseach meanwhile said an MBO at the airline would not be appropriate. The airline said the Taoiseach's comments did not represent a setback and its re-structuring plan continued.

One source at the airline was sanguine about the Goldman Sachs report and said the airline was not particularly interested in its content, but more interested in how various players would interpret it.

Government discussions about the issue are likely to intensify when the Taoiseach returns shortly from his trip to Asia.

According to political sources Mr Ahern is believed to be sceptical about floating the airline, whereas the Tánaiste, Ms Harney, wants to keep a more open mind. Last week there were suggestions of some tension over the issue.

This followed comments by Ms Harney about the Goldman Sachs report. "What we want to do is to make the best possible decision for the future of Aer Lingus. But we need clear advice and guidance in relation to that matter and that is why we asked the consultants to prepare some advice for the Government. We will then look with an open mind on what the needs of Aer Lingus are," she said.