Aer Lingus passengers were relieved after the Labour Court averted a dispute that threatened services last Thursday. It is unlikely, however, that managers in the State airline will feel the same degree of comfort this weekend.

As indicated in a statement by its board last Monday, turbulence persists. The fundamental problems have not gone away.

Aer Lingus and its passengers face a prolonged period of uncertainty - with more pay talks on the horizon, lingering fear of an all-out foot-and-mouth outbreak on the island, and a slowdown in the US economy eating into profits from its most lucrative routes.

In addition, there is said to be a widely held perception within the airline that its management is divided on the question of how to bring it forward.

There are no easy answers. For the first time since the company faced insolvency seven years ago, its directors held an unscheduled board meeting last Monday.

They suspended recruitment; agreed to pursue an aggressive reduction of all costs; initiated a review of schedules to match capacity; revised forecasts; and agreed to match staffing, overtime and other resources to those revisions.

Such steps were taken to stabilise the company's current position. Directors warned further action might be necessary.

It is understood the board was told profits this year would drop to £15 million ($19 million) from £60 million last year, according to the latest estimates. Its target was to generate £50 million - including an increased wage bill of £30 million.

Company sources rejected suggestions that it was attempting to scare workers into new wage agreements.

The company's interpretation was in marked contrast with the analysis of SIPTU, which represents the 3,000 clerical and operative workers who threatened to strike on Thursday. The union said it believed business was never better.

Government sources said the £15 million estimate was conditional on no further stoppages, no new foot-and-mouth outbreaks, and no further deterioration in the US economy. "That was dependent on things being resolved," said one, citing the revised estimate. "It's not meltdown but it's not far off it."

It may in fact be too early to call how the airline will perform this year. Yet the latest crisis at Aer Lingus - and associated damage to its reputation for reliability among customers - comes at precisely the time when it expects high bookings for the summer period, crucial to profitability. Bookings are said to be well down on last year.

No matter how Aer Lingus ultimately performs this year, one thing is clear: flotation is off the agenda.

When its chief executive, Mr Michael Foley, joined the company last September, he spoke of an initial public offering on the Stock Exchange in March. Citing the current difficulties and the slump in Eircom's value, company sources concede that the prospects of floating before an election are very remote. Still, the company and Government remain committed to that proposal in the long term. Aer Lingus wants to invest £1 billion in the next five years - it planned to raise £200 million by issuing shares on the Stock Exchange.

Company sources say that money - for new aircraft mostly - is needed in the medium term, described as two to three years. Others familiar with the company say the money will be needed sooner if its difficulties persist.

What Aer Lingus feels now is the hangover from its rescue: high expectations from a business that has grown steadily; and, partly because of that, staff are no longer willing to compromise on pay.

A telling reflection of this is the claim for a 70 per cent increase by pilots, represented by the IMPACT trade union.

Company sources argue the demand is unreasonable, but the pilots want parity with their counterparts in airlines such as Britain Airways, which is a member of the OneWorld Alliance with Aer Lingus. Either way, talks this week at the Labour Relations Commission proved inconclusive.

After almost six months of industrial unrest, which left passengers stranded on five days, there is still a risk of more stoppages. Tuesday's agreement brokered by the Labour Court chairman, Mr Finbarr Flood, followed 16 hours of negotiations between SIPTU and the airline.

A lot more talking is likely before the situation at Aer Lingus eases.