The shock resignation of Aer Lingus chief executive Mr Garry Cullen is a body-blow but certainly not a knock-out punch to the State airline's flotation plans. The company plans to go public within 12 months, giving it sufficient time to find a replacement.

However, the news comes at a bad time for the airline, which has spent much of its energy recently repositioning itself as a business/high end leisure carrier. Mr Cullen had been expected to guide the company through the run-up to flotation.

To borrow an aviation phrase, Mr Cullen was facing a turbulent time. The trade unions are pressing for a further 14.9 per cent of the airline - employees already have 5 per cent of the company - but are likely to end up with 14.9 per cent in total.

There was also the prospect of having to hard sell the Aer Lingus story. It is a good story - in 1998 the company's reported pre-tax profits of £52.4 million (€66.5 million) up 14 per cent on the previous year. Sales were up 12 per cent to £901 million (€1.14 billion). The company has a strong brand which is well known in Europe and the US.

Aer Lingus has also tied up a deal with OneWorld, the global airline alliance which includes British Airways and American Airlines. Through better interconnection (interlining as it is known), Aer Lingus will be able to offer more travel packages and extend its reach around the world.

However, airline stocks are not fashionable right now. The company is valued at as high as £500£600 million.

Ranked alongside the current "in" stocks such as those in the technology and telecommunications sectors, Aer Lingus, which is still perceived to labour under the State monolith tag, is not really very attractive to fund managers. They also view an increased staff shareholding with some alarm.

There have been rumblings of dissatisfaction about Mr Cullen in recent media reports - including one in today's edition of Business & Finance magazine. Union leaders have questioned whether he is the right man for the job, if he is tough and aggressive enough for the task ahead.

Sources say there were also some misgivings at senior executive level about Mr Cullen. He had been at Aer Lingus for 35 years, working his way through the ranks. He was chief operations officer before stepping into the chief executive's role which was vacated suddenly by Mr Gary McGann who took up a post of chief financial officer at Jefferson Smurfit. Mr McGann was criticised over the timing of his move, in the middle of difficult and protracted negotiations with TEAM Aer Lingus over its sale to FLS Industries.

Investment banking sources said last night that they would have no problem with Mr McGann. "He had a softer style than some people, but he was very competent and able," said one source. "We would have been very comfortable with him on road-shows."

Roadshows are used to "sell" the company to financial institutions, prior to flotation. In fact, said the source, the whole management team is impressive. The team includes deputy chief executive Mr Larry Stanley, who has taken over as acting chief executive. Mr Stanley, who co-ordinated the deal to join OneWorld, is seen as a possible successor. He is well known in the aviation industry - unlike Mr Cullen, despite his lengthy service to Aer Lingus - and fund managers like someone with his mix of experience.

"Aer Lingus has a good story to tell," said a investment source. "It is making profits and has withstood competition from the biggest low-cost carrier in Europe."