A drafting error could hold up the enactment of the legislation that will allow the break-up of Aer Rianta into three different airport authorities, The Irish Times learned last night. Barry O'Halloran and John McManus report.

The mistake could require another amendment to the Bill. In this case, the legislation, which is due to go before the Seanad tomorrow, would have to go back to Dáil Éireann, which has broken up for the summer and is not due to sit again until September 29th.

The Seanad is sitting this week to debate the final stages of the Bill, which is scheduled to be passed tomorrow night. However, that timetable is threatened by the possibility of the need for another amendment, as these changes have to go before both houses of the Oireachtas.

The mistake is contained in section 12(12) of the Bill as passed by the Dáil. This states that the person "carrying out the duties of the chief executive of Aer Rianta" should have their pay and conditions determined by section 29(4) of the Air Navigation and Transport (Amendment) Act, 1998.

But the State Airports Bill also amends section 29 of the 1998 Act. As part of that change, section 29(3) not section 29(4), is the one that determines the chief executive's pay and conditions. Section 29(4) deals with worker directors.

A spokeswoman for the Department of Transport confirmed last night that Aer Rianta had raised the issue with both the Department and the Minister, and pointed out that section 12(12) of the State Airports Bill needed to be amended as a result. She said that the Department was looking into the matter to "establish if it was a drafting error". She did not comment beyond that.

The Irish Times also learned yesterday that the Minister for Transport, Mr Brennan, was aware last year that Deutsche Bank, the trustee of the €250 million that Aer Rianta owes on a series of listed bonds, wrote to the State company expressing concern at the implication of the restructuring plans for the loan.

Soon after Mr Brennan announced plans to break up the company, the bank wrote on behalf of the bondholders asking Aer Rianta for an assurance that this would not breach the bond's terms and conditions. It is understood the State company informed the departments of transport and finance, and drafted a reply in consultation with them.

At the time, Aer Rianta replied that the restructuring would not breach the terms and conditions. It is understood that the company believed at the time that the restructuring would take place "while solvent", which the bonds' terms and conditions permit.

Aer Rianta chief executive, Ms Margaret Sweeney, this week expressed the fear that the break- up could be in breach of the terms, thus triggering an early repayment. This was sparked by the fact that the Government's advisers, law firm Arthur Cox, have said that the lenders would have to waiver some conditions to allow the break-up to go ahead.

Despite these fears, Standard & Poor's (S&P), the international rating agency, said it currently does not have any plans to review Aer Rianta's credit ratings. "It would be premature of us to comment," said a spokeswoman.

S&P last looked at Aer Rianta at the start of June, following the publication of its 2003 results. Although it flagged the issue of the reorganisation of the company, it left its credit rating at A, but with a negative outlook. The highest rating is AAA.

"A decision by the the Irish Government about the future ownership structure of Aer Rianta's Dublin, Shannon and Cork airports remains the key factor for the ratings and outlook on the company will remain negative until this issue is resolved," the agency said at the time.