Aer Lingus has discussed with its biggest rival, Ryanair, the possibility of both airlines using the terminal Ryanair wants to build at Dublin Airport. Such discussions raise the possibility of the State airline shunning services provided by the State-owned airport company, Aer Rianta.

At a meeting with an Oireachtas committee yesterday, Aer Lingus expressed opposition to plans by Aer Rianta to build a new runway at Dublin Airport and a new permanent fast-turnaround pier, known as Pier D. Such initiatives were unnecessary and would only increase the cost of air travel, the Aer Lingus chief executive, Mr Willie Walsh, said.

Addressing the Oireachtas Joint Committee on Transport, he also compared Aer Rianta's opposition to competition to resistance by Aer Lingus to the deregulation of the airline market in the 1980s.

"It reminds of the sort of statement Aer Lingus used to make 10 years ago," he said. "Until such time as Aer Lingus and other airlines can be satisfied that the existing infrastructure is being used to its maximum potential, no new runway should be built."

Mr Walsh also said that there was "enormous potential" to develop its US business, which was restricted at present due to a bi-lateral agreement. If the bilateral was changed, Aer Lingus believed it could double the number of transatlantic visitors to Ireland in a short period.

The airline's operating profit last year was more than €45 million. The recovery after a €50.6 million operating loss in 2001 was recorded despite a fall in scheduled passengers carried last year to 6.3 million from 6.4 million. The airline plans to carry seven million scheduled passengers this year.

Mr Walsh said: "Aggressive profit targets have been set for the business over the next two years that will see the airline generating significant double-digit returns at the end of this period."

Referring to possible war in Iraq, he added: "In the event of international events causing a sharp downturn in the aviation business, Aer Lingus will take urgent action to mitigate the effects of such a downturn and to protect the business."

Mr Walsh said Aer Lingus's recovery from the crisis that followed the September 11th, 2001, attacks on the US was not yet complete. The airline had failed in the past to consolidate its turnaround from previous crises by losing control of its cost base.

While Ryanair had set the benchmark in relation to cost control, Mr Walsh implied Aer Lingus was also taking a lead from Ryanair in relation to development plans at Dublin Airport.

Ryanair has appealed planning approval granted for the permanent Pier D, although a temporary facility is planned in time for the summer season this year. Mr Walsh said: "Aer Lingus supports the policy of developing low-cost facilities at Dublin Airport both through the temporary Pier D facility and through the building of a second terminal in competition with Aer Rianta."

A special panel set up by the Minister for Transport, Mr Brennan, is considering 14 expressions of interest in building a new terminal. In addition to the Ryanair plan, two other proposals were of interest to Aer Lingus. These had been submitted by the businessmen Mr Ulick McEvaddy and his brother Des, whose plan he described as "fantastic", and by the building group Ascon.

Mr Walsh said Mr Brennan had informed Aer Lingus that the policy seeking private sector investment in the airline still stood. He expected that the Minister would meet the airline executives soon to discuss that option further.

With the provision of any more State funding ruled out, Mr Walsh said outside investment was required to fund its future expansion. This was important in the context of the airline's plan to change and renew its fleet. It uses four aircraft types or subtypes, but believes significant savings could be generated by using only two.