Fallout for Aer Lingus: The Department of Transport will consider various candidates for the chairmanship of Aer Lingus this week following the decision by Mr Tom Mulcahy to step down.

A spokesman for the Minister, Mr Brennan, said it was important that a vacuum did not build up at the top of the company, although the airline is not due to hold another board meeting until late July. Mr Mulcahy, appointed by the former Minister for Public Enterprise, Ms Mary O'Rourke, was due to step down shortly anyway. A relatively short search for his successor will now begin.

Early speculation has centred on the chief executive of Anglo Irish Bank, Mr Seán Fitzpatrick, who was appointed to the airline's board in March.

However, there may be some reluctance to appoint another banker to the role, although Mr Fitzpatrick is believed to be highly regarded by Mr Brennan. Whether Mr Fitzpatrick would be willing to take the position may also be an issue, given the heavy demands of chairing the company and the ultimate political control.

Government sources deny that Mr Mulcahy's departure had damaged prospects for the sale or partial sale of the company. "While the chairman's position is an important one, the company will be making its pitch to the market on the basis of its financial fundamentals," said one source yesterday.

However, Mr Mulcahy's extensive contacts in financial markets and high-level banking experience clearly had a value for the airline at a time when fundraising or flotation were on the agenda. This background was one of the reasons he was offered the job in the first place.

Mr Mulcahy's successor would therefore need significant financial expertise, preferably at a senior level in a quoted company, sources suggested. Mr Mulcahy had a close working relationship with Aer Lingus chief executive Mr Willie Walsh, and the Government hopes this can be continued following the new appointment.

Mr Mulcahy was especially keen on the airline continuing to control its costs and he told the airline's a.g.m. earlier this year that the gap between success and failure in the airline business was very narrow.

Mr Walsh and his management team are understood to be anxious for some clarity on the Government's position on a sale. But sources suggest a sale will not go ahead until late this year at the earliest and possibly not until next year. Whether the full Aer Lingus management team will remain intact until then remains to be seen. Mr Walsh was recently offered the chief executive's position at Swiss International Airlines, but turned it down.

Mr Mulcahy and Mr Walsh presented the Government with a paper a few months ago suggesting a placement with institutions would be the best approach for the airline. Mr Walsh has told The Irish Times on several occasions that he has reservations about an IPO.

Aer Lingus as a company is well used to its senior board members being in controversial or tragic events. In June 2001, chief executive Mr Michael Foley departed after a board sub-committee upheld two complaints of sexual harassment against him. Mr Foley always maintained he was not guilty of the allegations made against him by his former personal assistant and by a SIPTU worker-director.

"I am shocked and disturbed by the decision of Aer Lingus," he said at the time. "I reiterate my total innocence of the allegations made against me and will take all necessary steps to clear my good name."

In August of that year, the company was struck by tragedy when the then chairman Mr Bernie Cahill died in a drowning accident close to his home in Schull, Co Cork. Gardaí reported he was trying to secure his speedboat and may have slipped. The Co Cork Coroner's Court recorded a verdict of accidental death.