Discussions on an employee share option plan (ESOP) at Aer Lingus are believed to be well-advanced.

It was unclear late yesterday whether a plan would be finalised this weekend, although it is thought that a draft deal with a number of interlocking elements was being assessed.

It is believed that this included a provision to use cash payments due to workers under the Cahill rescue plan to pay for shares in the proposed ESOP.

Two people familiar with the issues have confirmed this was discussed last week.

The Cahill plan granted a 5 per cent shareholding in the airline to its workers and about 4.18 per cent had been dispersed by the end of 1998.

There was an additional provision to disperse 5 per cent of after-tax profits up to a limit of £12.2 million to the staff.

According to Aer Lingus' 1998 annual report, the latest available, around £10.5 million was still available in the fund for dispersal among workers at the start of 1999.

This was because only up to 5 per cent of after-tax profits could be dispersed - in cash or shares, as decided by individual workers - in any one year.

The Minister for Public Enterprise, Ms O'Rourke, has said that no more than an additional 9.9 per cent of the airline would be granted to its workers as part of the latest plan.

This would bring the workers' share to 14.9 per cent, equalling that of Eircom's staff before the flotation of Telecom Eireann last year.

While the pilots' union, IMPACT, previously indicated it would seek an additional 14.9 per cent in the latest ESOP, it is thought this possibility was not discussed last week.

The State-owned airline, which maintains that it can be floated late this year, plans to release its 1999 results in September.

Calculations and provisions for the ESOP will have to be included in those figures.

Ms O'Rourke has said that an agreement could be reached this month.

The company is facing separate discussions on pay - linked with productivity changes it wants - and on changes to its pension fund.