Dermot Mannion says delay over Terminal 2 is costing State dear, writes Ciarán Hancock

Should he ever decide to quit the airline industry, Dermot Mannion could probably have a successful career in politics. The Aer Lingus chief executive displays all the skills of the most battle-hardened politician in answering tricky questions.

When asked about the distraction of having Ryanair as a near 25 per cent shareholder and how Michael O'Leary might make life difficult, Mannion talked of not being distracted from "the day job" and of acting in the "best interests of all shareholders".

He was similarly evasive about whether the €16.2 million Aer Lingus has spent on advisers in defending the approach from Ryanair represented value for money.

While he talked about the Labour Court issuing a "landmark judgment" in relation to its dispute with workers over the introduction of new contracts, he declined to reveal what the cost might be to the company of compensating workers for taking cuts in their holiday entitlements and take-home pay as recommended by the court.

The one issue that Mannion was willing to tackle head-on was that of Terminal 2 at Dublin Airport, a €395 million project. This should come as no surprise given that the new facility is targeted at long-haul operators and Aer Lingus has big plans to expand its services to the US and beyond.

"We support the urgent need for Terminal 2," Mannion said. "It will be a benefit to all airlines and to all passengers using Dublin Airport."

Ryanair disagrees, of course. Michael O'Leary argues that T2 is costing far too much and his airline will not use it.

Mannion refused to be drawn on the cost issue, saying a variety of consultants had delivered their views to the Government, the Dublin Airport Authority and the aviation regulator.

It was now time to get on with building the facility and he confidently predicted that airport users would be willing to pay for a terminal that will boost Dublin Airport's capacity to 35 million annually. "Whatever the cost is now, if it gets delayed it will be a hell of a lot more."

Now fully into his stride, Mannion added: "I repeat what I said. Any further delay will cost more and more money. This country is bedevilled by delays in Terminal 2... we all need Terminal 2."

Aer Lingus's share price fell by 5c yesterday to €2.85 but overall it was a good day for Mannion. Analysts were pleasantly surprised by the results.

The airline's fuel is hedged at $63 per barrel of oil for the rest of 2007, in line with Ryanair. "Good progress has been made in recent months in protecting its profitability against the effects of higher fuel costs," said Stuart Draper, head of equity research at Dolmen Stockbrokers, which initiated coverage by putting a buy recommendation on the stock and setting a 12-month, €3.25 price target on Aer Lingus.

Mannion has €400 million from the IPO that he can leverage to buy new planes. He is currently playing Boeing and Airbus off against each other. The smart money is on the European manufacturer getting the contract, given that the Aer Lingus fleet is currently using Airbus.