TRANSPORT Minister Séamus Brennan has appointed an interim chairman to Aer Lingus, following the resignation of Tom Mulcahy.

John Sharman, an international businessman specialising in the provision of finance in the aviation sector, is already on the board of Aer Lingus and has agreed to take over the job of chairman on a temporary basis. It is understood that he is unable to take on the job full-time.

Sharman will take on the role of interim chairman at a critical time. On Tuesday, the cabinet is expected to discuss a potential management buyout offer from the chief executive of Aer Lingus, Willie Walsh, and two co-directors.

The buyout will also be raised at a board meeting of Aer Lingus, scheduled by Sharman, for early this week.

News of the management buyout proposal is likely to reignite the debate over the future of Aer Lingus. Aviation experts say Aer Lingus cannot continue in state ownership because strict EU competition laws prevent the state investing in the airline. Without any access to funds, Aer Lingus would be unable to grow or survive a serious downturn in the notoriously cyclical aviation sector.

However, the government is nervous about the reaction to privatisation of the airline and it has continuously put off a decision on the future of Aer Lingus, much to the frustration of management.

It believes there is a limited window of opportunity to sell the airline. There has been a staggering turnaround in Aer Lingus' fortunes, but the airline would still be vulnerable to the kind of collapse in the aviation sector that followed the 11 September attacks.

The prospect of the government agreeing to sell a state asset to a managementled consortium without seeking tenders throughout the EU is thought to be a remote one. But the request by management for permission to make an offer means that the issue will finally have to be addressed.

Although it is certain that the matter will be discussed on Tuesday, informed sources say the government is unlikely to make a decision before the end of the summer. The government would not wish "to be seen to be bounced" into making a decision. Ministers will also be nervous about making any potentially contentious decisions in the immediate aftermath of a bad result in the local and European elections.

The negative reaction of some Fianna Fáil backbenchers to the break-up of Aer Rianta ? which does not involve any privatisation ? will also be a factor in the decision making. It is conceded, however, that a decision will have to be made on an Aer Lingus sell-off before the end of the year.