The fact that business consultant Mr Derek Kelly had a shareholding in Inflight ATI was one of three factors which led to the failure of the company's plan to float on the Luxembourg Stock Exchange, according to sources close to the exercise.

Negative publicity concerning Mr Kelly - a consultant who would have owned 9.85 per cent of the company had the flotation proceeded successfully - dampened investors' enthusiasm for the flotation.

When it emerged that Mr Kelly had some years ago been disbarred by the High Court in London for seven years from operating as a company director, the issue received wide coverage. Mr Kelly is not a director of the company but had been involved in introducing various parties and facilitating the Inflight proposals.

He had links with Airtel ATN Ltd, a Dublin company whose chairman is the former Labour Party leader, Mr Dick Spring, and which has an agreement with Inflight allowing it to use technology essential to Inflight's business plan.

Sources said Inflight chief executive Mr Mario Cardinali and chairman Mr Albert Reynolds were not aware of Mr Kelly's difficulties in the UK and were dismayed when the details emerged in the media.

Another factor which hit the planned flotation was the timing, with the company discovering that most of the institutional investors were essentially shut down for the month of August.

The attempt also coincided with a sell-off on the Nasdaq, the major US electronic trading floor, and generally jittery markets.

Another problem was the view among many potential investors approached that Inflight was essentially a start-up company, and so more appropriate for venture capital or investment capital than a listing.

A spokesman for Banque Internationale a Luxembourg, which acted as listing agent and sub-registrar for Inflight, said investors' belief that Inflight was really in a start-up situation, suitable for venture capital, was by far the most important factor.

Negative publicity concerning Mr Kelly was not such a big issue. "Just because someone you might not like owns a percentage of Barclays Bank wouldn't make Barclays Bank a bad company," he said.

Another source said: "Overall, the company did not start working on this in time, and had not done enough preparation." Approaches to fund managers started in earnest at the end of July and early August. The flotation was scheduled for August 6th, but was deferred and then cancelled on August 20th.

During the attempt to float, commitments for about half of the required amount were received, according to one source.

The company found fund managers, even if they favoured a proposal, needed to go through an approval process which took time. That time did not exist. "Continental Europe really does close down for August. It's not at all like Ireland or the UK."

The flotation would have sold 30 per cent of the company for €11 million (£8.7 million). The flotation prospectus states that all the directors would be locked in for 18 months in terms of selling off their own shareholdings.

The chairman, Mr Reynolds, would have received an option for 250,000 shares at the introductory price of €1 per share. That deal fell with the collapse of the flotation proposal.

The prospectus also indicates that none of the directors, including Mr Reynolds, has received any payment from Inflight to date. Mr Reynolds was to be rewarded at a rate of €57,000 a year, for 12 days work a year.