DUBLIN, Ireland (AP):

The Irish government will sell most of its stake in Aer Lingus Group PLC next month to permit the airline to buy new aircraft and expand services worldwide, the government and company directors announced Monday.

The September 29 flotation on the British and Irish stock exchanges is expected to raise about €400 million (more than US$500 million) and enable the airline to borrow up to €2 billion (US$2.5 billion) from banks for the purchase of new long-haul and short-haul aircraft. Transport Minister Martin Cullen said the sale would "give Aer Lingus both the commercial flexibility and the financial strength to succeed in what is a highly competitive global marketplace."

Wider capital markets

Aer Lingus chairman, John Sharman, said the sale "will give the company access to the wider capital markets and enable it to realise its full potential. Aer Lingus and its staff can now look forward to the future with confidence."

The joint government-Aer Lingus statement said qualifying investors would need to commit a minimum of €10,000 (US$12,800).

It said the price of Aer Lingus stock would be fixed a few days before the flotation following a meeting of the Cabinet of Prime Minister Bertie Ahern.

The government currently holds more than 243 million shares, or an 85.1 per cent share, of Aer Lingus stock, while an employee trust holds the remaining 42 million, or 14.9 per cent. Until now, the public has been unable to trade Aer Lingus shares.

Cullen said the government would retain a minimum 25.1 per cent stake in the privatised entity. He said this holding would be strong enough to block the sale of airline assets considered of Irish public interest, such as Aer Lingus' current landing slots in Heathrow Airport in London.