Last week Aer Lingus published its prospectus, valuing the airline at 1.1bn- 1.3bn when it floats on the stock market in two weeks time.

The prospectus shows that underlying profits stalled in the first half of the year, largely because the fuel bill soared to 90.6m from 56.4m in the same period of 2005.

Goldman Sachs, which will get some of the 30m the airline is paying for professional advice in the run-up to privatisation, believes the profits squeeze will continue for the foreseeable future.

Last year the airline reported operating profits of 90m.

Goldman Sachs forecasts this will slide to 70m- 80m over the coming years as the airline balances rapid growth with rising costs for labour, fuel and landing charges at Dublin airport, which is building a second terminal largely to accommodate Aer Lingus.

Airline management is pitching the company to investors as a purely Irish story, although it is understood that they are seriously considering setting up bases abroad after 2010. Andrew Lobbenberg, an analyst at ABN Amro in London, believes a base in mainland Britain is unlikely.

"The UK low-cost market is extremely competitive, " he said. "Belfast could be an attractive market. It is already a base for EasyJet and Jet2 and these might arguably be less daunting competitors than Ryanair."

Lobbenberg also speculates that an open-skies agreement between Europe and the US, which is crucial for Aer Lingus's growth plans, could allow the airline expand beyond its Irish base.

"Given its established brand in Boston, Chicago and New York, and the lack of a major US hub in Boston, Aer Lingus might see opportunities in flying from the US, and Boston in particular, to other EU points, " he says.