Aer Lingus has shrugged off a disappointing set of results for 2005 and said they will not put off potential investors.

Operating profits, margins and turnover were all down at the airline, which is hoping to be floated on the stockmarket by June.

The state-owned company reported a decline of over 30 per cent in operating profits to €72.4 million, while turnover was down from €906 million to €883 million. The margins at the airline, which have been rising over recent years, slipped from 11.8 to 8.2 per cent.

Chief executive Dermot Mannion admitted this was not sufficient. "We'd like to get back into double figures as soon as possible," he said. Ryanair is forecast to have an operating margin of 21 percent this year, while British Airways is predicting 7.3 per cent.

Despite these financial setbacks, Mr Mannion and chairman John Sharman insisted the results for 2005 were strong by the standards of other European flag carriers. "These are very good numbers," said Mr Mannion. He said the airline achieved the results without having to resort to fuel surcharges.

Costs were up slightly, from €800 million to €810 million, although the company reduced employee numbers from 3,906 to 3,475. The company now has €317 million of free cash on its balance sheet.

Passenger numbers were up 6.9 million to 8 million, with overall loads factors down slightly from 82 per cent to 81 per cent. The figures show that the airline's average fares dropped again in 2005.

Short haul fares dropped from €80 to €67, with US fares dropping from €253 to €240. The company is now selling 71 per cent of its tickets through the internet.

With a privatisation in the offing, Mr Mannion was asked what the airlines sales pitch was to potential investors. He said it was its "twin track" strategy of growing both long haul and short haul. He said without adding extra employee numbers the company could grow significantly. "We have more than one string to our bow" he commented.

Mr Mannion emphasised that during 2005 the airline introduced a new simplified fares structure and removed premium class seating from all its European services.

He said while the margins were lower than achieved in 2004, they were very high by the standards of a European flag carrier airline. He acknowledged some low fares carriers were achieving higher margins but they had a different offering.

Speaking about 2006 trading he said it was very encouraging, with operating profits set to rise beyond 2005 figures. He described bookings for the first few months of 2006 as "very, very strong".

Asked when the airline might complete a sales process he said the optimum timing was the middle of the year. He said to meet this deadline a Government decision would be needed "within weeks".

He said once this decision was taken the airline was likely to deal with several issues, including the subject of a pension deficit. He said he believed this could be solved, although he declined to say how much was needed to plug any potential gap.

He said a new management structure was also being prepared, including the appointment of a new chief financial officer. Chairman John Sharman hinted that board changes were also possible, with people familiar with quoted companies being appointed.

In sales and profit terms the airline is making approximately 60 per cent from short haul and 40 per cent from the United States market.

Mr Mannion said this ratio might change in future. He revealed that the airline recently spent €190 million on two long haul aircraft from Airbus which will be delivered next year.