AER LINGUS chief executive Dermot Mannion has ruled out the granting of share options to his senior management team ahead of the company’s planned stock market flotation in June.

Mannion has said the granting of options ahead of the flotation would represent “a conflict of interest” for the senior managers as they would be guaranteed to benefit from the flotation.

Mannion also said the company’s controversial pension deficit would have to be solved through contributions from the state, the company and the airline’s 3,500 employees.

It has already been suggested the estimated €200m deficit will be met partly from the proceeds of a share sale. Any increase in employee contributions to the scheme is likely to meet stiff resistance from the trade unions.

One possible solution would be for the staff to “pay” for additional equity in the company through higher pension contributions. In the flotation of Telecom Eireann, now Eircom, workers agreed to make contributions to the company pension scheme of 5.3% of their salary and in return were granted an additional 5% of the company.

Aer Lingus staff own 14.9% of the airline, but unions are likely to seek a higher stake if the flotation proceeds. Mannion said such an equity solution would be a matter for the shareholders, the departments of transport and finance.

Siptu, the largest union in the airline, is opposed to the flotation of the airline and is unlikely to entertain such a proposal at this juncture.

Aer Lingus last week announced the senior management team that will lead the airline through the flotation process. All were internal appointments.

Last week Farrell Grant Sparks, adviser to the employee share ownership trust, also received a copy of Mannion’s strategic fleet plan, effectively outlining the company’s business strategy.

The plan covers the airline’s expansion plans over the coming four years. Government approval for a June stock market flotation would be needed by the end of this month. Mannion said any delay in government approval would push the flotation to early autumn.