They flocked in their hundreds of thousands to snap up Telecom Eireann shares and whether they have sold or held the stock, the Republic's new army of private investors are understandably happy with the way the Telecom flotation has gone.

But will this army of private investors be as keen to buy into Aer Lingus if, as seems likely, the State airline is floated on the domestic and international stock markets next year? Judging by the initial reaction from Dublin stockbrokers, there is no expectation of an Aer Lingus flotation turning into a Telecom-like private investor beanfeast.

"Putting money into Telecom was a nobrainer. It involved investing in a strong company in a go-go, high-growth sector with the prospect down the line of a takeover. Aer Lingus does not have the same attraction. It might be making money, it might be part of an alliance, but it's going to need an awful lot going forward at a time when there is a strong body of opinion that the airline industry is heading for a downswing," said one Dublin broker who declined to speak publicly. "I might be pitching for the business," he quipped.

Certainly, it will take a lot more than Dulam an for the Government to be able to float Aer Lingus at anything remotely near the 30-plus earnings multiples obtained for Telecom. Telecom was able to float on those sort of ratings, and even at an appreciable premium to its peer group in the European telecoms sector, because it was seen as a high-growth stock. It is debatable whether Aer Lingus would be seen in the same light.

Aer Lingus may be back making solid profits - just more than £51 million (€65 million) last year when once-off gains are excluded - after its years of turmoil. But it has huge cash needs - around £500 million for fleet replacement over the next five years, and much of that will have to come from the proceeds of an initial public offering and possibly further share issues. Any investor buying into Aer Lingus would have to take into account that they may be faced with further cash calls in the years following a flotation.

Another factor which militates against a massive public response to an Aer Lingus IPO is the very size of the company. Selling off more than £3 billion worth of Telecom shares meant that investors were able to get £3,000 worth of shares before being scaled back.

Even selling off all of Aer Lingus would involve at best £500-£600 million (based on current ratings for airlines) worth of shares being available to both institutional and retail investors. This means even a modest response from the public would allow only a relatively small allocation of shares to each applicant.

Competition in the routes serviced by Aer Lingus will remain intense, but against that there is no doubt that membership of the One World alliance will open up new opportunities for Aer Lingus, by feeding passengers from its partners' hub points and integrating schedules and frequent-flier programmes.

So what is Aer Lingus worth? The first thing to be said is that there is no point using Ryanair as a gauge of Aer Lingus's value. The airline industry in general may attract very modest ratings, but it is only the low-cost, low-frills operators like Ryanair and South-western in the US that trade on earnings multiples between 25 and 30. That is because the no-frills sector is seen as the growth area of the airline industry.

The more conventional full service airlines are currently trading on moderate earnings multiples and of the major international airlines, only British Airways trades on a 1999 earnings multiple close to 20. Lufthansa and KLM are on p/es of around 13 and 15 respectively, while US airlines attract even lower multiples - United, Continental and Delta only trade on p/es of between six and nine. Nobody knows what shape the markets will be in by the time Aer Lingus moves towards an IPO, but using the current range of multiples for the sector and factoring in the airline's cash requirements and limited growth prospects, then it is difficult to see Aer Lingus attracting a higher rating than an established major-industry player like Lufthansa with its p/e of just over 13.

Thirteen times Aer Lingus's after-tax (and exceptional) profits last year of just over £50 million indicates a current value of around £650 million. Whoever is appointed by the Government to co-ordinate a flotation of Aer Lingus will have a major selling job on their hands if that sort of value is to be generated for the State airline.