The staff shareholding group at Aer Lingus is moving toward formal opposition to Ryanair's €1.4 billion bid as leading international investment funds take up crucial positions in the battle for control of the airline. Emmet Oliver reports.

Several members of the Employee Share Ownership Trust (Esot) have spoken to The Irish Times and confirmed that opposition to the bid is significant among trustees, with the chances of a positive result from a ballot of staff members extremely slim.

Meanwhile, investment groups such as Gartmore and JP Morgan Asset Management now have leading positions in the airline, it has emerged. JP Morgan has a 3.1 per cent stake in the airline, while Gartmore controls 1.1 per cent. The Irish banks AIB and Bank of Ireland also have substantial stakes.

Based on these figures, JP Morgan could play a pivotal role, particularly when opponents and potential opponents of the Ryanair bid already control approximately 45 per cent of the shares. Included in this group is the Government, the Esot, the pilots and Denis O'Brien. It is understood Mr O'Brien may be prepared to purchase more shares if required to block the Ryanair offer.

Sources close to Mr O'Brien denied yesterday that a recent Ryanair advert that made reference to Mr O'Brien's companies in Malta was the reason for his share-buying in Aer Lingus. Sources said Mr O'Brien believed in an independent Aer Lingus and was a long-time admirer of the airline's turnaround story.

The pilots group yesterday bought about 200,000 shares at €2.87. Meanwhile, a parliamentary reply showed that advisers to the Aer Lingus IPO, working for the Government, would be paid €18 million for their services. The reply was made by transport Minister Martin Cullen.

A rejection of its bid by the Esot would be a serious setback for Ryanair. One trustee source said: "We cannot give a formal view until we receive an offer document, but at this stage the chances of the offer gaining acceptance are very remote. A share offer of even €100 per share would not please some of our members". Any attempt to "sweeten" the offer is unlikely to change the minds of the Esot's wide membership, which is drawn from two main unions, Siptu and Impact.

While the Esot recently talked about how taxation would cut into any return Esot members would get from the Ryanair offer, this was not a crucial point, sources suggest, and while Ryanair is anxious to woo the Esot grouping, no meetings have taken place between Ryanair and the Esot trustees and pressure is building on the Esot to either buy additional shares or signal its opposition to Ryanair's offer. However, the Esot has a duty to fairly consider the Ryanair offer and cannot respond until a formal offer document has been issued.