The Government will sell part of its stake in Aer Lingus next month via a stockmarket flotation that will value the national airline at between €840 million and €940 million.
Shares will be offered to the public but Minister for Transport Martin Cullen said there would be no repeat of the "all-singing, all-dancing approach" taken to the sale of Eircom which left 500,000 small investors nursing losses.
The Government yesterday applied to list the airline's shares on the Dublin and London stock exchanges, with plans for a separate private placement of shares in the US. September 28th or 29th are the most likely dates for trading in the company's shares to begin. The Government is to retain at least a 25.1 per cent stake in the airline.
The airline's financial results for the first half of 2006 - to be published in the coming weeks - will show that operating profits are broadly in line with last year's figures, although fare reductions have hit revenues. Traffic, however, has increased on its routes, although recent security restrictions in the UK have undermined tickets sales somewhat.
Mr Cullen said yesterday few people thought the airline or the Government would advance its plans this far, but Aer Lingus was now set for a new era of expansion.
The airline's chief executive, Dermot Mannion, who joined from the Emirates airline in 2004, said Aer Lingus would now submit itself to the "judgment of the market".
Mr Cullen said a scheme would be operated to encourage retail investors or private individuals to retain their shares for at least the first year. Those taking this step would be rewarded by getting one extra share for every 20 ordinary shares held.
Only investors buying at least €10,000 worth of shares will be allowed participate in the process.
Staff at the company will retain their 14.9 per cent shareholding, although they will have to use some of their own funds to buy shares and prevent any erosion of this position. Under a deal struck with the company, part of a recently agreed pay rise will be used to buy shares on behalf of staff.
If the airline is valued at the higher end of expectations, the staff shareholding, held by an Employee Share Ownership Trust (Esot), would be worth €150 million.
This would mean each employee's stake would be worth about an average of €43,000 each. There are about 3,475 employees at the airline.
Mr Cullen made it clear the approach to the Aer Lingus flotation would be radically different from Eircom in 1999. "This will not be an all-singing, all-dancing approach," he said.
"This is the right decision for the company, its employees, customers and Ireland, and it is taking place in order to give Aer Lingus both the commercial flexibility and the financial strength to succeed in what is a highly competitive global marketplace."
He said the Government would have the ultimate say over the valuation of the company after studying the case put by advisers. Asked would the Government's position be diluted in future fundraisings, he said its stake would not dip below 25.1 per cent.
The Labour Party's transport spokeswoman Róisín Shorthall said there was no convincing case for privatisation. "This is possibly the least positive time since 2001 to be putting an airline on the market."
She cited high oil prices, security concerns and delays in getting an open skies deal. She said there was nothing to stop the Government investing directly in the company and there was nothing to protect the Government's 25.1 per cent share in the long term.
The key advisers for the Government are AIB Capital Markets and UBS Investment Bank. Goldman Sachs and Merrion Stockbrokers are advising the company.