Despite his experience in the sector, Willie Walsh's crew could hit turbulence in setting up a long-haul low-cost airline, writes Siobhán Creaton, Finance Correspondent.

Richard Branson once joked that the easiest way to become a millionaire in the airline business was to start off as a billionaire. Mr Branson, who has survived and prospered in this brutal industry, was humorously referring to the airline industry's tendency to chew up the wealthy and to burn cash.

Over the past 30 years, about 90 new airlines took to the skies in the US yet only a handful have survived. In Europe, about 50 have sprung up and, with a fare war raging across the continent, the casualties are mounting. This week there is much speculation that yet another new airline will be born.

Aer Lingus outgoing chief executive Willie Walsh and his two colleagues, Brian Dunne and Séamus Kearney, are said to be considering launching a low-cost long-haul airline that could offer a range of cheap new destinations from Ireland and other European destinations. The trio haven't confirmed this plan, with Mr Walsh saying he is considering up to 40 propositions.

During their tenure at Aer Lingus they were applauded for leading the revival of the State airline through a controversial cost-cutting plan and its re-styling as a no-frills low-cost carrier that managed to generate healthy profits.

In November, clearly frustrated by the Government's refusal to embrace their plans for Aer Lingus, Messrs Walsh, Dunne and Kearney announced their departure, saying they would be gone in six months. The news was a blow for the airline and an embarrassment for the Government.

Three months later, reports that Aer Lingus top management team may be limbering up to go into competition with its former employer led to some politicians accusing them of having a conflict of interest. While Mr Walsh has strenuously denied this, in recent days their imminent departure has been agreed.

The Aer Lingus team is highly regarded within the aviation industry and many believe they would come to potential investors with great credibility.

"What they did at Aer Lingus was obvious. It wasn't rocket science and it was what Ryanair did 15 years ago. Their greatest strength is that they have shown the discipline to cut costs and to do things in a simple way," one source said.

These attributes are music to the ears of investors and will certainly ease their fundraising efforts.

"There is plenty of money around. They would probably be able to raise €20-€50 million fairly easily but the question is, is that enough? They would more likely need to have about €100 million on their balance sheet to show their competitors that they were serious long-term players," one said.

Raising that kind of money may be a tall order but much would depend on their business plan. Venture capital groups have been ready investors in the aviation sector in the past and will be an obvious port of call for the would-be airline chiefs.

The large investment houses such as Goldman Sachs and JP Morgan may weigh up such a venture. Texas Pacific Group, the company established by Ryanair chairman David Bonderman, has made many hundreds of millions of dollars from taking a stake in airlines. Mr Bonderman has long since sold out his shareholding in Ryanair, netting a profit of about €150 million and was mentioned as a potential investor in Aer Lingus in the past.

The Ryan family, who have gained more than €500 million from Ryanair, may also be potential investors. Other wealthy Irish entrepreneurs have also been mentioned as likely to consider such a proposal.

One market source suggested the outgoing Aer Lingus team would be unlikely to get into bed with investors who are naïve about the industry's prospects.

Launching a long-haul low-cost airline is a rare enough phenomenon but has been attempted in the past. In 1980, Tony Ryan wanted to start an airline flying from Shannon to New York for £99 one way. Around the same time Freddie Laker launched his ill-fated Skytrain, offering cheap transatlantic flights.

The low-cost models so successfully adopted by Southwest Airlines in the US and by Ryanair, have been built around short-haul routes. The efficiencies achieved were based on the swift turnaround of aircraft and squeezing as many flights a day out of each of its aircraft.

Obvious destinations for the new carrier to target would be the US west coast, the Far East and South Africa. Just how many routes it will be possible to launch in the near term may be dependent on the negotiation of an Open Skies agreement between the EU and the US.

Some industry sources point to the fact that, over the next three to five years, the regulations governing long-haul travel may well be loosened in the same way that short-haul European routes were.

Joe Gill, an airline analyst at Goodbody Stockbrokers, believes the viability of a long-haul low-cost model will be enhanced by the introduction of the next generation of aircraft from Boeing and Airbus. These aircraft will allow airlines to operate long-haul flights on fairly thin routes while still making money.

It would probably take between nine and 12 months to set up such an airline and there is no guarantee it will ever get off the ground. Much will also depend on what happens at Aer Lingus and whether the airline's new management can steal some of their thunder.

The three airline executives are believed to have been asked to look at setting up airlines in other countries and would be obvious recruitment targets for other flag carriers eager to emulate Aer Lingus's success. A job at British Airways, for example, could net Mr Walsh a salary of more than €1 million a year. The potential spoils from a shareholding in a successful new airline could ultimately prove to be much greater or a great deal less.