The Government has decided not to seek a buyer or strategic partner for Aer Lingus in the short term because of the downturn in the aviation sector. At a Cabinet meeting yesterday, the Minister for Transport Mr Brennan informed ministers that there were no plans to seek a buyer for the airline at resent, although he planned to publish a Bill which would leave the way open or a possible sale in the future.

Mr Brennan will publish this Bill in the next few weeks. Apart from addressing the issue of a potential sale, it will also put the Aer Lingus Employee Share Option Plan (ESOP) on a statutory footing. Under the ESOP, staff are entitled to a 14.9 per cent share in the company.

A spokesman for Mr Brennan said it would not make sense to search for potential buyers in the current environment, with large carriers facing bankruptcy and some Asian airlines under severe financial pressure because of the SARS virus. However, he said ultimately the Department wanted to sell the airline, or at least bring in a strategic partner.

The chairman of Aer Lingus, Mr Tom Mulcahy, said recently it would be the wrong time to search for buyers. He also denied the airline had been approached by any potential buyers, including the US businessman Mr David Bonderman. He said any sale was a matter for the Government as the sole shareholder.

The company has also denied weekend reports that Mr Mulcahy and chief executive Mr Willie Walsh are about to start a six-month long search for potential buyers or partners. A spokesman said no such process was being considered and the matter had not been discussed with Mr Brennan.

The airline is approaching its most important time of year and has tried to stimulate the transatlantic market by unveiling a major seat sale. Transatlantic has held up despite the events in Iraq, but continuing uncertainty could still dent this summer's numbers.