Aer Lingus chairman, Mr Bernie Cahill, said there was a "compelling business case" to float the Stateowned airline.

Mr Cahill said the airline's management would carry out a "communications process" to ensure that its staff were aware of this. He was speaking last night at the launch of Aer Lingus services to Munich and Stockholm, which begin this weekend.

It is understood that airline sources see Mr Cahill's comments as signalling increased activity in the negotiation of an employee share-option plan (ESOP) at the airline. Corporate advisers to the Government and to the airline's trade unions have engaged in preliminary discussions on the ESOP.

But difficulties may arise as Aer Lingus workers already own 5 per cent of the airline, granted under a share-ownership plan introduced under the Cahill rescue plan in the early 1990s.

Aer Lingus trade unions are likely to argue for an additional 14.9 per cent stake in the initial public offering on the basis that this equals the stake granted to Eircom workers last year. But the Minister for Public Enterprise, Ms O'Rourke, is known to be against this, arguing that workers should be granted an additional 9.9 per cent stake only, equalling that of Eircom workers when added to the 5 per cent they already own.

The airline is advertising today for a group chief executive to replace Mr Garry Cullen, who resigned unexpectedly last month.

It is understood that Aer Lingus will be able to offer the incoming chief executive a remuneration package worth in excess of £200,000 - about twice that earned by Mr Cullen - but it is still unclear whether its interim chief executive, Mr Larry Stanley, will apply for the position.

Mr Stanley did not apply when the top position last became vacant in 1998, although people close to the flotation process have said they would be "comfortable" if Mr Stanley were appointed.