The Government will retain a "significant" shareholding in Aer Lingus when it privatises a majority stake in the State airline, according to Minister for Transport Martin Cullen, reports Arthur Beesley from Druid's Glen

While the Minister confirmed publicly for the first time yesterday that he favours selling a controlling interest in the airline, he declined to say whether a trade sale or a stock market flotation was more likely.

The Minister would not quantify the size of the majority stake that the State would sell, but said the Aer Lingus brand would be protected after the sale process.

Several months after the departure from Aer Lingus of former chief executive Willie Walsh, Mr Cullen also told the IMI national conference he hoped to appoint his successor "very shortly". The clear frontrunner at this stage is Dermot Mannion, chief financial officer with Emirates.

Mr Walsh, now chief executive designate of British Airways, told the conference he believed there was still scope for further significant cost reductions in Aer Lingus.

The Government has already passed legislation to enable it to sell its 85.1 per cent stake in the airline and Mr Cullen said he wanted a Cabinet decision very shortly to initiate a sale process. "There's no question but that the brand will be protected. It is one of the most internationally recognisable brands. Anybody that would do anything to that brand would be a fool... also remember the State would remain a significant shareholder in the airline as well," he said.

Mr Cullen favoured selling a majority stake to get the maximum value for the company and boost its potential for development. He said he was not "hung up on figures" when asked whether he favoured selling in excess of 51 per cent or merely 51 per cent.

That decision would be a matter for the professional advisers.

Asked when the sale might proceed, he said that three factors would impinge on that decision: "the general market; how markets are performing; the credibility of the new management in Aer Lingus, which hopefully will be resolved very shortly; and the general state of the aviation sector as well."

Mr Walsh said Aer Lingus faced a number of problems, not least certainty around the issue of sourcing capital for new planes. "I think the debate has gone on for long enough. I think it's time for action," he said.

"There is scope for significant cost reduction in Aer Lingus and that work is ongoing. Maybe the pace at which it's happening at the moment isn't as fast as I would have liked to have seen had I remained in the position but it's not for me to do that."