Fine Gael and Labour believe they have won significant concessions from IAG and a sale of the State’s 25 per cent stake in Aer Lingus is looking increasingly likely. The sale is to be discussed by the Cabinet later, Taoiseach Enda Kenny confirmed.

An expert group report commissioned by Minister for Transport, Pascal Donohoe, is understood to be strongly supportive of the deal. Included in it is an assessment of the value of the Heathrow slots by advisers IBI Corporate Finance and Credit Suisse.

It concludes that the price offered by IAG for Aer Lingus reflects a fair one for these assets. IAG has also made other commitments on the Heathrow slots, the use of Cork and Shannon airports, the retention of the Aer Lingus brand and the creation of new routes and jobs.

Mr Kenny said Mr Donohoe would be presenting the report to Cabinet on Tuesday.

Stock Exchange

If the Government does signal acceptance, then the next step would be a Dáil vote on the sale. IAG would be expected to quickly formalise its €1.36 billion bid through a Stock Exchange announcement.

This would allow the deal to be notified to the European Commission for competition clearance.

A number of other shareholders would be likely to signal acceptance, though a key issue will be the stance of Ryanair, which owns just under 30 per cent of the airline. To date it has only said it will consider the matter if IAG makes a formal bid.

The IAG commitments will seek to address the issues raised by the Government in its initial decision not to accept the bid when made six months ago and also concerns raised by the Labour Party at its national conference. The key issues agreed in negotiations are: A guarantee for a minimum of seven years on the use of the Heathrow slots for flights from Dublin, Cork and Shannon, including commitments to continue service levels from the two regional airports. The Government will also have a continuing veto on the sale of the slots.

A commitment to retain and develop the Aer Lingus brand and keep its headquarters in Dublin

Plans to launch new trans-Atlantic services from Dublin and to increase connectivity for Irish passengers via flights directly from Dublin and via Heathrow and Madrid to other locations.

A commitment to develop Dublin as a hub for other British Airways traffic, creating jobs and a promise to adhere to existing registered employment agreements at the airline and to honour a pension deal reached last December.