By Mairead Carey

THE Irish government has decided to sell off most of its stake in Aer Lingus, but is to retain a 25% share in the company.

Following a meeting of the Cabinet on Tuesday, Transport Minister Martin Cullen announced that he has told his told corporate advisors to start work on the sale “immediately.”

The sale will be done through an initial public offering (IPO).

He said that the transaction is taking place “in order to give Aer Lingus both the commercial flexibility and the financial muscle to compete and succeed in the global marketplace.”

The government will retain a shareholding of at least 25.1% of the airline. The department said this affords the ministers for finance and transport “the flexibility to balance the airline’s commercial needs while protecting the state’s strategic interests.”

This “golden share” would allow the government to block a complete takeover of the company. Under company law, a complete takeover offer can only succeed if it attracts support from over 80% of the shareholders.

The government hopes that its decision to hold on to a quarter of the company will appease the trade unions, some of which are completely opposed to the move. The unions fear that privatization will mean less job security and will ultimately see worker’s wages and conditions of employment weakened.

Taoiseach (Prime Minister) Bertie Ahern told the Dail (Parliament) on Tuesday that he hopes the sale of a majority stake will not act as a breaking point for trade unions in the partnership talks.

Ahern said that he hoped “satisfactory understandings” could be reached with trade unions on employment status and pensions at the airline.

A current pension deficit at Aer Lingus has yet to be addressed, and management has said money from the sell-off would plug that gap. However, the main aim of privatization is to raise money for fleet expansion.

Before the announcement was made on Tuesday, Cullen met leaders of SIPTU and IMPACT unions, who represent the majority of the airline’s 3,600 staff.

“We have mandated company management to resolve the key issues raised by the trade unions during the consultation process. I am confident that a way forward can be found in which the staff’s interests can be addressed and in which the future of the company can also be secured,” Cullen said.

SIPTU has already balloted its staff for industrial action as a result of moves to privatize the company, and despite the optimistic note struck by Cullen, industrial unrest at the airline is still a possibility.

On Tuesday union officials insisted that even a 25% stake might not be sufficient to safeguard the government’s influence over the company.

SIPTU President Jack O’Connor has described the decision to privatize Aer Lingus as “dreadful,” and one the country would live to regret.

O’Connor said if the concerns of his members regarding pay and job security were not addressed, his union would have no alternative but to resort to industrial action.

SIPTU will seek sanction from its National Executive Council to serve notice on the airline to strike in the event that outstanding issues are not agreed before the sell-off.

The sell-off is expected to take place in September once the regulatory approvals that are required to launch the company on the stock exchange are secured.

Workers at the airline currently hold a 15% stake in the company.