There is no longer a strategic case for the Government holding a 25 per cent stake in Aer Lingus, Minister for Transport Leo Varadkar said today.
In the clearest indication yet that the State's share will be sold, Mr Varadkar said the Cabinet would decide whether airline assets would be put on the market.
The Minister confirmed the focus of a review on the sale of state assets in his department had been on aviation rather than the domestic transport sector.
"No formal decision is made yet," he said. "What I can say is that Aer Lingus stake was held for strategic reasons and having studied the matter over the summer I don't think that really stands anymore."
Mr Varadkar said a draft memo examining the option of the sale would be brought to Cabinet tomorrow.
Economist Colm McCarthy recommended disposal of the stake in his report into the possible sale of state assets in April. Mr Varadkar revealed several months ago a sell-off was being considered.
Ryanair owns 29.4 per cent of the company - just shy of the level which prompts an automatic takeover bid under company law. The budget carrier has already had two bids rejected.
One major concern over a takeover was that the Aer Lingus brand could lose its valuable landing slots in London's Heathrow Airport and the state would miss a key tourism and business link to the British capital.
Mr Varadkar told Newstalk radio: "We have a 25 per cent stake. You actually need 30 per cent to block any changes on slots - more and more people are using other connections other than Heathrow."
On the sell-off of airport assets, the Minister said it would be decided by the Cabinet but any deal is complicated by debts in Dublin Airport Authority.
Ryanair said this afternoon that if the Government wished to dispose of its stake without selling it to them, it would not make a bid.
The no-frills airline said it would "welcome another financially strong airline investor acquiring the Government's 25 per cent stake" to restore shareholder value in Aer Lingus.
Ryanair said it would consider entering into discussions with investors for Ryanair's stake subject to an acceptable agreement on price.
"Ryanair will not engage in, or comment upon, rumour or speculation, but remains willing to work with any other Aer Lingus shareholders to maximise shareholder value which has under the current board of Aer Lingus collapsed by more than 80 per cent from over €3.00 per share in early 2007 to less than €0.60 per share in recent days, it added.
Additional reporting: PA