Analysis Government must resolve issues that could derail process to float airline write Emmet Oliver

Despite a full Cabinet decision yesterday in favour of floating Aer Lingus, the details about the transaction remain somewhat vague and the climate for a sale uncertain.

The Government has refused to say whether the sale of Aer Lingus will take place in June or September. There is also no clarity on precisely how many shares the Government intends to hold onto.

In a press statement yesterday, the phrase "at least 25.1 per cent" was used.

This suggests that the Government may want to hold onto something like 30 per cent in order to prevent its stake being diluted in the next few years.

While the existence of such a "golden share" would be welcomed by the unions, it could also result in the valuation of the airline being reduced significantly.

While the Government has to be given credit for getting this far, there are plenty of events that could derail the whole process. Some cynics suggest that Taoiseach Bertie Ahern would welcome a reason to postpone the sale, but this is strongly denied by officials.

While the Government statement failed to state when the transaction is likely to take place, the Minister for Transport Martin Cullen did say that advisers would "immediately" start work on the sale and most observers believe this means a June transaction is the preference. But September is not being ruled out.

In one way, the failure to name a firm date leaves opponents of privatisation in something of a quandary. How can a union plan industrial action when it doesn't even know when a sale is to take place?

Government sources a few months ago were more worried about industrial action than they appear now.

This is because, so far at least, Impact has steered away from industrial action and is an active participant in talks on the sale. The largest union, Siptu, on the other hand has adopted a more unambiguous strategy.

But even its chosen path is a complicated one. While the union is steadfastly opposed to a sale, it cannot afford to miss out on talks about the airline's pension problems or discussions about job numbers.

Crucially, over the next few weeks, these talks will take place within the context of a sale, but Siptu will still have to participate. Otherwise the union will have little influence over the solutions which emerge.

The looming pension deficit at the airline is something that concerns all workers at Aer Lingus. The Minister recognised this last night and said that an "upfront investment" would be made in the pension fund from the proceeds of the sale.

But this will not be sufficient on its own. Increased contributions from staff and the company will also be required, he said. The breakdown of these contributions is also the subject of negotiation.

The most intractable issues in the whole sale were always going to be the price of the airline's shares, the pension deficit and the timing of the transaction. The Government has managed to shift these issues over to Aer Lingus management and various corporate advisers.

The complexity and controversial nature of each one means that a sale in June could prove difficult.

The other unknown factor is the climate for any sale.

The airline sector is notoriously cyclical and while valuations for airline stocks, particularly low-fare carriers, are relatively healthy right now, this could change within a matter of months, even weeks.

A slight dip or rise in the price of jet fuel can exert huge influence over airline stock prices - and that is before the impact on stock values of industrial action.