Ryanair has ruled out any increase in its €2.80 a share offer for Aer Lingus, indicating that its bid for the former State-owned carrier is close to collapse.

In a letter sent yesterday to thousands of Aer Lingus shareholders, Ryanair chief executive Michael O'Leary made it clear there would be no improvement on the €2.80 a share offer.

"In our opinion, there is nothing in the Aer Lingus defence document or its strategy as articulated by the chief executive that justifies a price in excess of €2.80. Accordingly, Ryanair confirms that it will not increase its offer of €2.80 per Aer Lingus share."

Mr O'Leary's letter comes on the eve of the announcement of a ballot of members of the Employee Share Ownership Trust (Esot) on the Ryanair offer. Union sources are confident the offer will be firmly rejected. About 4,600 members of the Esot are entitled to vote, of which about one-third are former employees.

Ryanair, which has a 19.2 per cent stake in Aer Lingus, has already indicated that it does not believe its bid can succeed without the support of the Esot, which controls 12 per cent of the airline.

Mr O'Leary's letter is strongly critical of the Aer Lingus board and some of its members, including chief executive Dermot Mannion and Seán FitzPatrick, chairman of Anglo Irish Bank.

The letter questions the amount of shares both men have purchased in Aer Lingus, as well as chief financial officer Greg O'Sullivan. Ryanair points out that all three men purchased less than €21,000 worth of shares each .

Mr O'Leary writes: "If your chief executive's priority is to create tangible shareholder value, why has he personally invested so little (less than 5 per cent of his current annual income from the company) in Aer Lingus's excellent prospects? He doesn't seem willing to invest much money in his own strategy."

It says Mr FitzPatrick acquired only "9,090 Aer Lingus shares at a cost of just €20,000, which is less than one-seventh of his current investment in 15,000 Ryanair shares, which are valued at over €140,000. We commend Mr FitzPatrick for his proven track record in backing winners".

Aer Lingus last night declined to comment on the contents of Mr O'Leary's letter.

In another development, pilots at Aer Lingus, who have already purchased significant shares in the airline, are studying the idea of setting up a voluntary PRSA for themselves. A PRSA (personal retirement savings account) is a portable, low-cost form of pension. Groups of pilots could make contributions to such a product. It has greater flexibility in terms of investment than standard pension schemes. It could theoretically be used to buy shares in future, as well.