Staff at Aer Lingus are expected to use a new profit-sharing scheme to ensure that their current 14.9 per cent stake is not diluted down to less than 5 per cent in the forthcoming flotation.

The Government is expected to issue new shares in Aer Lingus as part of the flotation and current shareholders, including the State and the unions, will have their stakes diluted down unless they purchase some of the new shares.

Staff could end up holding as little as 4.4 per cent of the shares if the dilution is allowed to happen.

Sources said yesterday that staff, which own shares through the Employee Share Ownership Trust (Esot), may need to come up with €90 million to maintain the 14.9 stake.

Negotiations are set to begin shortly on where this money can be sourced.

Sources said yesterday the most likely option was the Esot borrowing the money and repaying the funds out from the proceeds of a new profit-sharing scheme agreed with company. This will involve the company setting aside a small percentage of profits each year, which will go into the fund.

It is possible that this money could also provide staff with funds to buy shares in future fundraisings.

Another suggestion which some union officials have floated is the idea of dividends helping to repay any borrowing, but airlines are traditionally slow to pay dividends.

Ryanair, the main rival to Aer Lingus in Ireland, does not normally pay dividends for instance.

This is just one of the ways that the unions could purchase the new shares.

It might also be possible for staff to trade productivity agreements in exchange for shares, but this might be more difficult legally.

While Impact may be prepared to swing its support behind the idea of a profit-sharing solution, the other union at the company, Siptu, yesterday rejected the idea.

Christy McQuillan, Siptu representative at Aer Lingus, said yesterday: "People will have to come up with a far more imaginative idea than that."

The other complicating factor is that a segment of the 14.9 per cent stake is not controlled by the Esot, but by individual staff members.

Under a previous restructuring of Aer Lingus, shares were awarded to individual staff members rather than via the Esot.

These staff members will have to find some way to fund extra share purchases personally.

Official notice of industrial action was served on Aer Lingus by Siptu yesterday in the event of the company proceeding to privatisation "unilaterally and without agreement on the core issues", said the union.

Siptu national industrial secretary Michael Halpenny said that issues of job security, no compulsory redundancies, outsourcing and pensions needed to be taken seriously.

"There is also the question of ensuring that in any transaction the employee shareholding is not diluted from the current level of 14.9 per cent," he said.