Aer Lingus managers will not be awarded any stock options following this month's IPO, but are in line to be paid annual bonuses amounting to 40 per cent of salary for their work in 2006, a report on the company reveals.

An analyst's report by Goldman Sachs, financial advisors to the company, also notes that the company will suffer a €11 million "hit" because of the recent alleged terrorist activity in London and subsequent security restrictions.

Financial figures included in the report show the airline's turnover rising to €1.1 billion in 2006, however operating profits are set to slip from €90 million to €67 million this year. The forecasts are based on the IFRS accounting standards.

The report notes that the carrier's management team are relatively new in their roles and there are no plans to incentivise them via stock options. Most flotations usually involve management getting stock options.

However, bonuses will be paid. It is understood these bonuses will not be tied into the IPO but based on the company achieving certain goals on punctuality, service levels and sales growth.

The recently expanded board of the airline will have to sign off on the bonuses. Based on the 40 per cent figure, chief executive Dermot Mannion would qualify for a bonus of about €152,000.

The airline has made a decision not to award stock options in order to show that the airline is being floated for strategic reasons, rather than for the benefit of management. It is understood the two main unions at the airline, Impact and Siptu, were also strongly opposed to the idea of stock options being awarded.

The report is generally upbeat about the airline's prospects, pointing to the revenue boost being provided by long-haul routes, the introduction of fuel surcharges and sharp growth in ancillary revenues.

The report highlights open skies as a risk to the future growth of the airline. It suggests its growth strategy could be undermined if EU and US negotiators do not agree a new open skies deal. It also points out that some strands of US opinion are against foreign control of US airlines and that this is behind the current hold up.

"Until the ownership issue is resolved, it is hard to see an EU-US open skies deal being signed - and that could leave Aer Lingus in limbo."

The report also cites rising costs as a key challenge for the airline.

"Aer Lingus's labour costs are set to rise sharply due to the high Irish wage inflation and a separate agreement between the company and the employees."