The Government and Aer Lingus are set to announce details of the national airline's partial flotation today, ending years of speculation about the State company's future.

Industry and Government sources confirmed to The Irish Times last night that transport minister, Martin Cullen and Aer Lingus chief executive, Dermot Mannion, are set to reveal details of the airline's initial public offering (IPO) this afternoon.

"At this point in time, that is the case, unless something very dramatic happens," one source said last night.

It has also emerged that the carrier will start talks with Boeing and Airbus on an ambitious renewal and expansion of its fleet that is expected to result in new orders for €2 billion worth of aircraft.

The new aircraft orders, which will support the most ambitious growth in the airline's history, will be funded in part by the proceeds of next month's planned initial public offering (IPO), which is expected to value Aer Lingus at between €700 million and €1 billion.

Aer Lingus is owned 85.1 per cent by the State and 14.9 per cent by it workers. It will seek a dual listing in Dublin and London.

The airline will have an initial free float of at least 55 per cent with trading due to begin before the end of next month.

The Government is committed to retaining a stake of at least 25.1 per cent but could initially keep up to 33 per cent.

The build-up to the decision was dogged with controversy, including a row over a shortfall in the company's pension fund and concerns that a sale could result in the airline losing valuable slots in London's Heathrow Airport.

A deal has also been agreed to allow the employee share ownership trust, which holds 12.6 per cent of the company (other worker-owned shares are held individually), to maintain its stake around this level through a profit-sharing scheme.

Aer Lingus itself is aiming to raise more than €500 million in fresh equity through the IPO. This will allow it to press ahead with its expansion, which has previously been thwarted by a shortage of capital and a lack of clarity over its long-term ownership.

The airline is aiming to expand both its long-haul and short-haul networks.

The order for up to 14 long-haul jets will be a contest between the two new generation long-range, medium-capacity aircraft being developed by Boeing and Airbus, respectively the 787 Dreamliner and the Airbus A350 XWB.

According to Mr Mannion the airline's business plan calls for the acquisition of the long-haul aircraft - seven for expansion and the remainder to replace the existing fleet of seven A330s - by 2010-2011.

Earlier this year, he told an Oireachtas committee that the airline needed to raise cash through privatisation in order to pay for the purchase of new craft.

The company will use the €500 million or so that it raises from the sale of shares and borrow the rest to fund its purchases.

However, some of the aircraft could be for later delivery than 201-11. Given the development schedules of both Boeing and Airbus, Aer Lingus is expecting to agree first a deal for "interim lift", until the manufacturers are able to supply the new-generation aircraft.

The Airbus A350 XWB is not scheduled to enter commercial service until 2012. The 787 Dreamliner is planned to enter commercial service four years earlier in 2008, but most production slots have already been filled up to 2011.

The airline's long-haul network comprises almost exclusively routes between Ireland and the US, although it started its firstforay to the east this year with the opening of a route to Dubai.

Mr Mannion believes Aer Lingus will be one of the winners of an eventual deal between the US and the European Union to liberalise transatlantic air services, which will allow it to expand beyond its present four routes to New York's JFK, Boston, Chicago and Los Angeles.

It is considering five to six additional US destinations, led by San Francisco but also including Philadelphia, Washington-Dulles, and Dallas-Forth Worth or Houston.

A US/EU "open skies" deal will also end the present restrictive system, which forces carriers between Ireland and the US to operate as many services through Shannon on the west coast of Ireland as they do through Dublin, effectively hampering the development of more services to the capital.

In addition to more routes to the US, Mr Mannion is also examining the opening of services to Asia, possibly to Shanghai, and to South Africa, led by Cape Town. - (Additional reporting Financial Times service)