The Government plans to refer the offer for Aer Lingus from International Consolidated Airlines Group (IAG) to a review group.

IAG plans to begin talks with the coalition following confirmation that Aer Lingus intends recommending its €1.34 billion offer for the Irish carrier to shareholders.

Following a Cabinet meeting this morning at which the Minister for Transport, Tourism and Sport, Paschal Donohoe briefed his colleagues, the Government decided to refer the issue to a review group.

It has also appointed IBI Corporate Finance, part of the Bank of Ireland Group, to advise it during negotiations on the future of the State’s 25.1 per cent stake in Aer Lingus, which is now worth €335 million.

The Aer Lingus board is preparing to recommend that the company’s shareholders accept a €2.55 a-share offer from IAG, moving the pair closer to a deal following six weeks of negotiations.

IAG says in a statement issued this morning that it “intends to engage with the Irish Government in order to secure its support for the transaction”.

The Government along with Ryanair, which holds 29.8 per cent, is one of two key shareholders whose acceptance is needed before the deal can go through.

IAG pledges that the Aer Lingus brand will be preserved, that it will continue to operate as a separate business within the group. It also signals that it is committed to ensuring that the Republic maintains its air links with key markets for investment and tourism.

The group’s statement says that it recognises the importance of direct services and air route connectivity for investment and tourism in Ireland.

IAG made the latest of three approaches to Aer LIngus at the weekend when it proposed paying €2.55 a-share for the company, a total of €1.36 billion.

The Irish company’s board confirmed in a statement on Tuesday that it has told IAG that it would be willing to recommend the offer to shareholders, subject to the group addressing the “interests of relevant parties”.

The statement is referring to concerns that the Government has in relation to the impact of a sale on the Republic’s air links.

IAG has already said that it would only go ahead with a deal if both the Minister for Finance, Michael Noonan, who holds the State’s shares, and Ryanair, accept its offer.

The Government cannot sell its stake without first getting the approval of the Dail.

Any such deal would also have to get the approval of EU Commission competition regulators, a process that could take up to two months.