The aviation industry is littered with casualties, from Pan Am to Swissair, and there are plenty of reasons for investors to keep well away. But in a victory of optimism over experience, the government is ploughing ahead with the sale of Aer Lingus and, two weeks from now, shares in the national airline will begin trading in Dublin priced somewhere in the range 2.10- 2.70.

There is some basis for the government's optimism. In an industry awash with red ink, Aer Lingus is making money. Profits were flat in the first half of the year but, considering that the fuel bill soared to 90.6m from 56.4m in the same period of 2005, this was a respectable performance.

After the swingeing cuts of recent years, it is also a lean operation, with a cost base a lot closer to budget airline EasyJet than full-frills operators such as British Airways.

The big story for potential investors is Aer Lingus's ambitious growth plan, and most of the 534m it hopes to raise from the share sale has been earmarked to double the size of the fleet over the next six years. As a result of all this expansion, Aer Lingus will not be paying dividends.

Even the threat posed by Ryanair, which has attempted to rain on the Aer Lingus parade with big expansion plans at its Dublin base, may not be the bloodbath that many fear, according to aviation analysts.

Hugo Scott-Gall of Goldman Sachs in London predicts the two rivals may eventually settle into "an uncomfortable duopoly" where the real losers will be weaker European airlines such as Italy's Alitalia, which is being squeezed out of Ireland.

"More often than not, it is the number of competitors than can destabilise pricing on a route, " he says.

"Even having two competitors where one is Ryanair is preferable to facing multiple competitors."

Andrew Lobbenberg of ABN Amro believes Aer Lingus will continue to have a clean run to European airports that refuse to cut the type of sweetheart deals demanded by Ryanair.

"Aer Lingus can offer value-formoney flights, at a slightly higher price point, serving more central airports and offering greater convenience than Ryanair, " he says. "Airports or regions that are reluctant to provide third-party funding may also offer a less competitive environment for Aer Lingus."

But potential investors still have plenty of reasons to walk away. If they are not turned off by the minimum investment threshold of 10,000, they may balk at the government's insistence on keeping a sizeable golden share in the national carrier. Added to the big chunk already controlled by employees, this means that 40% of the shares will be in the hands of people whose top priorities may not necessarily be in the airline's best interests.

Airline management is putting a brave face on this serious handicap, claiming that golden shares has not stopped other European flag carriers from being successfully sold off in the past.

Management also points out that the government has not interfered in the recent running of the airline, even during the painful restructuring that led to almost half of the workforce losing their jobs in the past five years.

Nevertheless, government has not been entirely hands-off, keeping a virtual veto over the airline's landing slots at Heathrow, where it is the fourth-biggest operator. The airline has no plans to give up the lucrative slots, which account for two million of the eight million passengers it carries every year. But in the fastchanging aviation business, access to Heathrow may not always be as important for Aer Lingus as the government seems to believe.

The big employee shareholding, which entitles workers to two seats in the boardroom, is another turn-off for investors.

In other former semi-states such as Eircom, employee share ownership trusts have turned out to be just as hard-nosed as other shareholders, largely because most of their members have moved on to jobs elsewhere. Aer Lingus is different and its workers will be a lot more concerned about keeping their jobs than maximising the value of their shares.

And there are other clouds on the horizon. Aer Lingus has bought industrial relations peace in the run-up to privatisation by handing out generous pay awards. The result is that its payroll costs are rising faster than the competition, according to Scott-Gall at Goldman Sachs.

Fuel is the other big concern.

Aer Lingus has already locked in the price of most of its fuel needs for the rest of 2006. But only 16% of next year's requirement has been hedged, exposing the airline to whatever.

"No potential investment in any airline should be contemplated without understanding the industry's very fragile economics, " says Scott-Gall. "Margins are extremely thin and fixed costs high."

Against this backdrop, investors should proceed with caution. If the airline's advisers are worth the 30m that Aer Lingus is paying them, the shares will be priced to go and should perform well in the early days on the stock market. But with so many negatives hanging over the stock, investors would be well advised to grab the easy money and run, even if this means losing the bonus shares that will be awarded 12 months from now.