FEARS are rising that Aer Lingus will miss its planned flotation date for June and is now unlikely to come to the market before September.

“Assuming the flotation will actually go ahead, it could take place in July, at a push, but is more likely to happen in September,” a source close to the process said. “There is no way that August would be considered as most market participants are on holiday then.”

The cabinet has yet to give privatisation the final go-ahead. The government is willing to allow the airline to raise €170m from the initial public offering (IPO) to plug an actuarial pension deficit. This is on condition that Aer Lingus and employees each agree to increase their annual pension contribution by 2 percentage points per annum from the current 6.35% rate of salaries.

This will add another €4m to the carrier’s annual wages and salaries bill, which is running at more than €200m. Sources also say it is now unlikely the Irish Airlines Superannuation Scheme, the pension scheme Aer Lingus shares with the Dublin Airport Authority and SR Technics (formerly Team Aer Lingus), will be broken up as a consequence of the flotation.

“That was considered when the looming pension hole cropped up as an issue, but it would be far too difficult to split the joint (pension) assets. A far simpler approach is to put the €170m into a supplementary fund,” a source said.

Industrial unrest has now emerged as the main stumbling block facing the flotation in recent weeks. Ireland’s largest union, Siptu, which represents 2,100 of the airline’s 3,500-strong workforce, has agreed to hold a ballot on strike action this week as it ups its campaign against privatisation.

Aer Lingus’s other main union, Impact, representing cabin crew, pilots and middle managers, has taken a more circumspect approach. It told management last week it expects five “tests” to be met in advance of any flotation. These cover investment, pensions, pay, profit-sharing and job security.

The airline’s employee share ownership plan (Esop) has a 14.9% stake in the carrier. It would have to subscribe to shares in the flotation in order to keep its holding at that level.

Dermot Mannion, the airline’s chief executive, has ruled out the granting of share options to his senior management team ahead of the flotation for fear of a “conflict of interest” where a flotation would guarantee them a benefit.

The state is to retain just more than 25% of the airline after any IPO to protect the Aer Lingus landing slots at Heathrow airport.

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