The Government should invest in Aer Lingus but workers should also make concessions to keep it in business, NCB stockbrokers said yesterday. Days after the State airline said it would cut capacity by a quarter leaving up to 1,700 jobs at risk, NCB said the firm had "no option" but to approach the Government.

In a note, its analyst Mr Shane Matthews cited government support in the US for its airlines in the slump that follows attacks on the World Trade Centre and the Pentagon by hijacked planes.

The viability of several US and European carriers has been threatened following the attacks in what was already a bad year for the industry, with sales falling due to slower economic growth.

While the situation at Aer Lingus is grave, the Minister for Ms O'Rourke has said the EU's support for £700 million (€888.9 million) in State aid in mid-1990s after the Gulf War was conditional on its being the last such package offered to the company.

But Mr Matthews said: "The Government should it wish to help the firm directlly will obviously need approval from the EU. While such approval would not have been likely two weeks ago, the move the US government to bail out its own airline industry may weaken EU resolve.

"While we believe an investment by the Government is likely to reap long-term rewards, we believe the Government must play 'hard ball' and seek some concession from the workforce above and beyond those already outlined by the firm.

While the workers look set to bear the brunt of these measures, it is worth noting that (they) are in fact shareholders themselves and while their average investment may be modest, practical issues suggest assistance rather than resistance is the best way to protect this investment," he said.