Max Kingsley-Jones/LONDON

Aer Lingus should be ready to decide on its strategic partner by the end of the first quarter of 1999, enabling a firm agreement to be finalised during 2000.

The airline's executive vice-president for Europe, Richard Luchente, says that the carrier is discussing a strategic partner and/or potential shareholder with various parties. "We are talking to all the major groupings and will submit our recommendation to the Irish Government, which is our major shareholder, in March 1999," he says.

Talks began earlier this year after the Irish Government cleared the airline to begin a formal search for a partner. Once selection is finalised, it will clear the way for negotiations on the alliance and equity stake sale to begin, says Luchente. "Realistically, the negotiations could take anything up to a year," he says, suggesting that the earliest a deal is likely is in the first half of 2000.

Aer Lingus has a network of European services operated from its Dublin hub, and three key transatlantic services, to Boston, New York (Kennedy and Newark) and Chicago. The New York flights are operated under a codeshare deal with Delta Air Lines. In March, Aer Lingus will launch services to Los Angeles, and further US destinations, such as Philadelphia and San Francisco, are being considered. The Irish Government requires that certain services from Dublin to all the US destinations must operate via Shannon to sustain a reasonable level of traffic there.

Luchente acknowledges that the preferred partnership would be with, or would include, a US carrier, to provide the vital US network links. Although a deal is not conditional on an equity stake, an investment partner is vital to the airline's long-term future. The Irish Government has made it clear that it will not provide further funding.

United Airlines and American Airlines, the two key US carriers in the global alliances Star and oneworld, are understood to have held talks with Aer Lingus, but there is no obvious front runner. Luchente recognises that given the airline's current US operations, United would provide the best fit with its Chicago, New York Newark and Los Angeles hubs.

Meanwhile, Luchente says that the airline's European regional division, Aer Lingus Commuter, is performing well against rivals such as Ryanair. The division operates six Fokker 50s and seven British Aerospace 146s. Luchente says the fleet could be expanded by transferring Boeing 737-500s from the mainline fleet as they are replaced by Airbus A320s and A321s.

Source: Flight International