The chief executive of Aer Lingus has warned of significant negative consequences if the airline is not privatised within three months. Dermot Mannion said that plans to buy new aircraft could be disrupted and that delaying the flotation into the autumn left the process exposed to external shocks.

Speaking after addressing a lunch hosted by the Institute of Directors, Mr Mannion said he welcomed weekend comments by the Taoiseach that a sale would take place. But he pointed to the urgency of getting final Cabinet approval before the end of March, thereby permitting a sale in June.

There is no Cabinet meeting this week because ministers are travelling for St Patrick's Day celebrations, so that leaves March 21st and March 28th for a final Cabinet decision. If the decision is not taken in March, and the June date is missed, sources suggest a sale would have to be shelved until September or October. It typically takes two to three months to put together an Initial Public Offer (IPO).

Mr Mannion told reporters yesterday: "I think the difficulty a transaction post-June poses is twofold. One, it's holiday season, it's a four-month delay. Secondly, in terms of engagement with the investment community, they have a very short attention span, and if it's a transaction much later in the year they won't really engage with us now and will say come back to us two or three months from now."

He also warned that in the intervening period, outside events could damage the airline. "The airline industry, above all others, is subject to outside shocks and outside influences and frankly, the longer the period of time between a definitive decision and the date of the transaction, the more there is a risk of other extraneous factors jumping up which might have an adverse effect on the transaction. So really the sooner, the better."

Mr Mannion was also asked whether missing the June deadline would disrupt the airline's plans to order new long-haul aircraft.

"It could do. I can't be definitive on that now, because negotiations are still going on with manufacturers. But it would be unhelpful to that process, yes."

Mr Mannion told guests at the event that the airline's board recently signed off on a €2 billion fleet renewal programme. He explained that this would require 14 new long-haul aircraft. He strongly denied suggestions that Airbus were already in poll position for this contract.

Mr Mannion said it was wrong to suggest that Aer Lingus needed to raise just €400 million. He said €2 billion was needed and while the airline planned to borrow significant sums, it still needed to use the proceeds of any sale. Asked when he thought a sale might happen, he replied: "I've said June all along, so I am not going to change my tune on that now."

Mr Mannion also warned that "open skies" from 2007 could pose challenges for Aer Lingus. He said while it was true that Aer Lingus could develop new routes into the US, other carriers would be entitled to fly to the US from Ireland. For example, he said there was no reason why Lufthansa or Air France could not fly from Dublin to the US.

"That is why we need first-mover advantage," he said.