Aer Lingus likely to be floated on stock market
The much-leaked Goldman Sachs report into future options for the national carrier makes no formal recommendation but leans towards an Initial Public Offering (IPO) of the airline.
And it indicates strongly that the alternative - a part sale to private investors - would in any case likely result in a future flotation.
Although the report outlines numerous options, including a complete or partial divestment of ownership, it warns that any private investors or consortiums would seek an "exit strategy" for their investment such as an IPO.
However, the report also comes down in favour of an immediate IPO by pointing out that flotation is the option that would guarantee the best return. In the event of an IPO, the Government would retain a controlling stake to ensure its strategic interests are guaranteed.
Barring unforeseen and unpredictable circumstances - such as a sudden sharp downturn in the aviation industry - Goldman Sachs concluded that "Aer Lingus has the correct attributes for a successful IPO".
But the success of an IPO is dependent on the right timing and could be scuppered by a cyclical downturn in aviation industry.
And that risk is further complicated by the fact that any IPO would take a significant amount of time and resources to prepare.
Nevertheless, the report leans towards the IPO option by warning that if the Government chooses to sell a stake, private investors will seek up to a 15% discount to compensate for restrictions likely to be imposed by the Government.
But worryingly for the Government, the report is based on a scenario involving the retention of the Aer Lingus management team and repeatedly highlights the need for senior management to remain at the helm to ensure investor confidence going forward. The resignation of chief executive Willie Walsh and his management team will leave any investors wary.
The Government has promised to make a decision on future funding before Christmas. But the report warns "any transaction will involve significant effort and time by management and shareholders" and will not be implemented quickly.
In addition, delicate negotiations with unions and workers - who own 14.9% of the airline - will be critical to the success of whatever option is chosen.
SIPTU national industrial secretary Michael Halpenny said Sustaining Progress was the only framework through which any changes could be debated with unions.
"This report seems to have achieved a significance beyond its remit. This was not supposed to be seen as a recommendation and we don't see it that way," he said.
Labour transport spokes-woman Róisín Shortall said an Aer Lingus IPO could mirror the Eircom "disaster", while Fine Gael said it noted with concern "the report had warned about the dangers of losing senior management".
