Aer Lingus has acknowledged that yesterday's announcement of the world's biggest alliance of airlines, makes it even more imperative that it link up with a major partner.

An Aer Lingus spokesman said last night: "Today's announcement reaffirms Aer Lingus's need to become part of a strategic alliance."

Aer Lingus submitted a report on its future to Government earlier this month, stressing the need for a link-up with a major airline grouping. The airline will report back to Government with firm proposals in six months Aer Lingus has stressed that a strategic alliance is vital if it is to expand its business and grow its profits. This was echoed by others in the industry who said this latest alliance announcement will not affect Aer Lingus adversely in the short-term, but in the long-term being outside such alliances could pose serious problems.

Yesterday's announcement, was described as "one of the industry's worst kept secrets". It brings together five major international airlines - British Airways, American Airlines, Cathay Pacific, Canadian Airlines and Qantas. They have offered the customers improved customer services.

They have also promised no adverse affect on fares. Industry sources were quick to point out that the airlines were not promising lower fares.

"The message they are putting across is that it is a one-stop shop," says one source. "You book with American Airlines and you want to travel on to a destination they don't already serve. They can book you through to that destination because they have an alliance partner who flies there. As far as the customer is concerned the whole journey is American Airlines."

The alliance partners give one another a percentage of the profits for feeding the traffic through. The danger for Aer Lingus is that the alliance partners will refer the traffic to other destinations through their own group rather than the Irish airline, resulting in a loss of business.

"If you are not part of the particular grouping you are frozen out," says one source.

In its report to Government, Aer Lingus said that it faced substantial challenges in the key transatlantic part of its network. The American Airlines/BA alliance doesn't make it any easier. The transatlantic route is important, because it is very profitable. It accounts for up to 40 per cent of its profitability, although it carries 700,000800,000 passengers, or less than one-fifth of the total number of passengers who use Aer Lingus each year.

Aer Lingus chairman Bernie Cahill has stressed that the company will have to lengthen its sector journeys.