Fuel prices are going through the roof, the airline is facing serious industrial relations problems and many well-run and profitable companies with a market value of £500£700 million (€635E 888 million) are finding it difficult to attract investment interest.

But, less than three weeks into the job, Aer Lingus chief Michael Foley is convinced that the airline will have a good story to present to potential investors, when the sale of the airline and Aer Lingus's own £200 million fundraising gets under way next March.

"A lot of people say that midcaps are out of favour and multiples are low, but the success of the IPO will be determined by the ability of the company to perform in its own right. Obviously there are ups and downs, it's a volatile sector. But the business model will look good, and the opportunities we have to expand our business on the back of the Oneworld alliance are huge. That gives us access to 100 cities all over America - that's pretty powerful stuff. I'm pretty happy that the business model for Aer Lingus is good."

Mr Foley believes that Aer Lingus can maintain its recent impressive profits growth when it becomes a plc. "I think we can - it requires us to do things better and differently in the future, but the alliances give us access to a broader market." He also emphasises that Aer Lingus is not afraid of competition and says that the airline has performed impressively in sectors where it faces intense competition.

"We've been competing successfully on the Dublin-London route, an environment that's as tough as hell. Look at the transatlantic route. We didn't make any money when we were protected, but now we're doing better and better there. I remember when Delta came on to that route and I said to myself they're going to kill Aer Lingus, yet the figures show we have gone from strength to strength. I truly believe we have the capability to be very successful as we go forward," he said, comparing Aer Lingus's solid results and margins with less-than-impressive results from some of the major "full service" airlines.

"I'm banking a lot on Oneworld. I don't think you should underestimate what this relationship can do for Aer Lingus. The Irish market itself is finite, but there is a big growth opportunity in bringing people into the country. I wouldn't be here if I didn't believe there are good growth opportunities. I came from a nice job, I was doing very well, thank you. I'm here because I think the business model makes sense, I really, really do.

"I don't care what happens elsewhere in the sector, if we can deliver long-term sustainable growth, I'm confident we can sell it. And it's not beyond a reasonable possibility that maybe five years down the line part of our equity will be taken up by another major airline.

"That for me makes Aer Lingus a particularly attractive investment. The pace of consolidation is increasing and Aer Lingus, as part of a bigger organisation, can be extremely successful."

But Mr Foley accepts that the airline's currently chaotic industrial relations problems and inflated pay claims from some groups will have to be sorted out before Aer Lingus could even consider presenting itself to potential investors.

"I don't think we can live in the past as we go into the public environment and I've said this to people when I met the Central Representative Council and management groups. This is the real world, there's no place to hide, we have to deliver consistently good strong returns for investors, and if we don't we won't stay in business.

"So the way we operate and the way we behave will have to change. In the short term, all these issues are lingering around us. I'd prefer if they weren't, but one thing is certain, we can't go to the market with this sort of stuff hanging around - it has to be cleared up.

"We have pay claims on the table - some of them I suspect have degrees of validity and I've no problem with them and that's OK."

But it is clear that the pilots claim for the same pay as British Airways pilots rankles with the chief executive. "If I'm the manager of a McDonald's in Wexford and I'm serving a double cheeseburger and chips and I'm a manager in the Grafton Street branch of McDonald's, there's no way in the world that I can justify the same sort of compensation. The products might be identical, how it's cooked might be the same, but the dimension of the two businesses is just chalk and cheese. You're not going to see the manager making a pay claim for the same remuneration as the CEO of American Airlines, I mean we've got to get some sense here.

"But the thing that disturbs me most is this inter-union issue; that's something not of our making and not of our solving and it has the potential to do serious damage to this company.

"As far as I'm concerned this is something that needs to be settled between the unions and supported by congress - there are responsibilities there. If we are dragged into this issue, it's extremely unfair to the people here - they don't deserve that. This needs to be dealt with at congress level and within the structures of the trade union movement.

"It's very unfortunate and potentially very bad for the company. People have to take responsibility, that's my position and that's what I've been telling people. Here, we need stability, we have a good background in terms of where we are coming from, we have a business model that makes sense. The positives are there but we need to go to the market with stability.

Accepting that the debacle of the Eircom flotation has not helped Aer Lingus's prospects for generating investor interest, Mr Foley said: "In a way I'm glad it's in March and not now - recent history in people's minds would not be to our advantage."

Mr Foley said that he favoured having about 30 per cent of the Aer Lingus shares held by private investors. On the pricing of the IPO, he said: "We need to it to be fairly priced, but it's a matter for the shareholder to decide. The Government will have its own reservations about the Eircom issue and their experience there. I don't think the company should be heavily discounted because there's value in the business. We'd like a fair price with some space for the upside.

"I wouldn't mind having our point of view taken into consideration when it comes to the pricing, but I respect that they own the company, I don't. At the end of day it's the Government's prerogative as the shareholder to go for whatever price they can get, but I think that the Eircom experience will put some balance into their thinking."