IRELAND - Irish airline Aer Lingus is to make a "one-off" pension contribution ahead of its planned new €1.2bn initial public offering.

The Irish government has unveiled plans to list the company on both the London and Dublin stock exchanges before the end of next month.

The government, which currently owns an 85.1%, will retain a 25.1% stake. Staff own the remaining 14.9%.

The airline aims to use the cash to expand its fleet, as well as to pay down some of its pension deficit.

Although managers have been engaged in a long-standing dispute with unions over the pension deficit - they insist the company has no contractual obligation to fund it - the company is to pay about €100m into the scheme, according to reports.

The airline is reported to be looking to raise between €400m and €500m from the float, and is aiming to ensure that at least 50 per cent of the shareholder base - including the government - remains Irish.

Retail investors on both sides of the Irish Sea will be invited to participate in the float, but subject to a minimum subscription of €10,000. An extra one share will be awarded for every 20 which are still held by retail investors a year after the float.

Transport minister Martin Cullen said: "This is the right decision for the company, its employees, customers and Ireland, and it is taking place in order to give Aer Lingus both the commercial flexibility and the financial strength to succeed in what is a highly competitive global marketplace.

"The company is to be congratulated for its transformation in recent years and this IPO will now give it the access to capital it needs to develop new routes, and to grow in the years ahead in the best interests of the airline's customers, its staff and its shareholders."

But the airline has not yet managed to defuse its dispute with the unions, which have long been opposed to the carrier's flotation.

SIPTU's Christy McQuillan said: "The government's decision is not in the best long-term interests of the country, the travelling public or the workforce, and is a grave strategic error and bad value."

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