Calls for private sector investment in Aer Lingus have been rejected as premature by the Minister for Transport.

At a conference on the future of the Irish aviation industry, Mr Brennan said it was too early to celebrate yesterday's announcement that Aer Lingus was on course to return a €40 million profit this year - or to consider the future ownership of the airline.

It is imperative that the Aer Lingus survival plan - which is not due to be reviewed until early 2003 - is allowed to run its course before the long-term development of the company is assessed, according to the Minister.

Mr Brennan was responding to a call by the airline pilots' association, IALPA, for the issue of outside investment in the company to be placed back on the agenda.

The Government is committed to fostering private and staff investment in Aer Lingus, Mr Brennan told the conference, organised by IALPA.

But in the short term it remains vital that the company should concentrate on reducing overheads.

The Minister said: "Unless this effort continues unabated the airline remains vulnerable to market forces and particularly to unexpected economic and other external shocks."

IALPA president Mr Mark Tighe said that although the industry was "on an upward trend", Aer Lingus would be best placed to compete effectively if the Government encouraged private investors.

He said: "IALPA has faith in this Minister for Transport's ability to see past the here-and- now to a brighter positive future where the industry is able to attract badly needed external investment and thrive in the competitive market economy."

Aer Lingus chief executive Mr Willie Walsh said he was reluctant to address the long-term prospects of the airline amid continued volatility in the sector.

Aer Lingus was focused on lowering costs and improving value for money to passengers. The success of low budget carriers in the midst of a global economic slump proved that an airline equipped with the right business model could show a profit in challenging circumstances.

The issue of ownership lay with Aer Lingus's sole shareholder, the Government, and had not been discussed by its board of directors, Mr Walsh added.

Earlier Aer Rianta chief executive Mr John Burke told the conference that Irish airports had increased throughput by 3 per cent this year - a healthy performance in light of continuing uncertainty internationally.

Mr Burke urged the Government to construct a rail link to Dublin Airport as quickly as possible to cope with a projected rise in passengers numbers of 5 per cent per annum over the next 20 years.

Trinity College economics lecturer Dr Sean Barrett said that in contrast to Aer Lingus, many other national carriers throughout Europe continued to cling to outmoded - and unprofitable - business models. Their reluctance to rein in costs had created an opportunity for Aer Lingus to explore new lucrative markets, he said.