An auction of shares in the Aer Lingus employee share option plan (ESOP) is likely to take place by May as different groups seek to copperfasten their positions within the staff share block.

The annual report and accounts of Aer Lingus will be ready shortly and usually the auction of ESOP shares takes place soon after. This could be the last auction of shares to take place while Aer Lingus is a state-owned company. Sources said yesterday Government signals about privatisation were likely to push up the price of the shares, which trade in an internal grey market.

Staff who have left the company over the last three years have to sell their shares back into a common pool. The sale of these shares in an auction is normally handled by PricewaterhouseCoopers (PWC).

Because of the number of redundancies at the airline the number of shares going back into the pool is significant, said sources yesterday. However pilots at the airline denied suggestions among some Siptu members that pilots were buying up shares ahead of a flotation. Pilots are represented by Impact, not Siptu.

"Yes its true that pilots buy shares from time to time, but the ownership is spread very widely throughout the company," said one pilot yesterday. However the higher incomes of pilots allow them to purchase shares more often and some sources believe pilots could own between 2 and 3 per cent of the company now. Trustees of the ESOP declined to comment publicly on share buying trends.

The total staff shareholding is currently 14.9 per cent of the issued share capital of Aer Lingus Group plc.

This includes a shareholding of around 5 per cent provided under an employee share participation scheme agreed with staff in the context of the Cahill plan in 1993 and an additional 9.9 per cent provided under an ESOP agreed in the context of the 2001 Survival Plan.

It is understood that during auctions the shares that tend to trade are those released under the Cahill plan. These are held by individual shareholders, whereas the other shares are held in trust by an Employee Share Ownership Trust (ESOT). The ESOT is entitled to bid during auctions too and has been successful in snapping up shares in recent years.

The terms of the ESOP state that for as long as the Government holds any shares in Aer Lingus, the total staff shareholding will not exceed 14.9 per cent.