A report on the future of Aer Lingus prepared by merchant bank Goldman Sachs has recommended against a full sell off of the State airline but has indicated that a partial divestment of the State's holding on the stock market could be successful.
The report, which was published by the Department of Transport tonight, does not provide a recommendation on the future ownership of the State airline but examines several alternative ownership structures.
It claims a complete divestment of the Government's holding in the airline would not "facilitate the stated objectives".
"The State would not retain any influence through ownership and control will pass immediately to the buyer," it says.
"Whereas it is reasonable to assume that the new owner will also share the broad aim of ensuring commercial success, the acquiror's perception of commercial success may vary from that of the State," it warns.
However the report does conclude that a complete sell off might be appropriate should the Government decide that maximising the value of the company was of "paramount importance".
Although relatively well capitalised at present, the report says Aer Lingus needs to be more conservative than its competitors in managing its balance sheet given its lack of access to equity capital.
"Provision of new capital is a matter for shareholders; however, to the extent that access to capital is constrained, Aer Lingus is disadvantaged with respect to its competitors," it says.
The report says in periods of distress the future of the airline may be threatened.
Provision of transatlantic and other long-haul services is seen as critical to the Company's operations and represents significant potential.
The report, which was delivered to the Government seven weeks ago, the provision of transatlantic and other long-haul services is critical to the company's operations.
"Liberalisation will allow the company to expand long-haul services, if investment capital is available," it added.
