Aer Rianta has abandoned hope that its partial flotation to raise funds to expand its airports can proceed before the next general election, it is understood.
The State-owned airports company, which has borrowings of £200 million, has secured an A+ credit rating from US firm Standard & Poors. Senior figures familiar with the situation in Aer Rianta, which last March said it could go to the stock market in mid-2001, have cited opposition by certain Cabinet figures to the plan and delays in floating Aer Lingus.
A further element was the poor performance of Eircom's shares, which has left more than 450,000 investors nursing losses on the stock exchange.
While the Minister for Public Enterprise, Ms O'Rourke, wanted to bring a plan to float 30-35 per cent of the company to Cabinet last February, this was opposed by several of her colleagues.
These included the Tanaiste, Ms Harney; the Minister for Finance, Mr McCreevy; the Minister for Health and Children, Mr Martin; and the Minister for Arts, Heritage, Gaeltacht and the Islands, Ms de Valera.
Ms O'Rourke is understood to have held her view that the best means of securing funds to advance Aer Rianta's capital programme was a partial flotation.
This was the view of her advisers, AIB and Warburg Dillon Read, and of Aer Rianta's board and management.
Ms O'Rourke's advisers said up to 49 per cent of the company should be floated "as soon as practicable". A person with knowledge of that plan said it was always intended to proceed with an initial public offering in 2002. The basis for Ms O'Rourke's position was that she favoured neither a public nor a private monopoly in airport ownership. In addition, the Government is unwilling to release funds to Aer Rianta.
However, this was opposed by groups in Shannon and Cork, who believe a flotation could prompt a break-up of the group, leaving its two smaller airports in an unviable position. This is thought to have influenced the stances taken by Mr Martin and Ms de Valera.
It is thought also that certain Cabinet members may have expressed a desire to float the entire company, although Ms O'Rourke opposed this.
The Standard & Poor's rating, Aer Rianta's first, is significant because it will be able to secure favourable terms for its extensive loans.
This is important because these are likely to exceed £300 by the end of 2001 and reach the company's statutory maximum of £350 million early in 2002.
The ratings report said: "[Loan] coverages are expected to remain relatively strong over the forecast period, to 2005. Internal funds, however, are weak and insufficient to cover Aer Rianta's investments. As a result, borrowing and, consequently, leverage is expected to increase to an average of about 50 per cent until 2005, from 42 per cent in 1999."
Aer Rianta's Standard & Poors rating is the fifth-highest possible - not the second-highest as previously reported.
