The board of Aer Lingus is expected to set up a sub-committee today to select a successor to departing chief executive, Mr Willie Walsh, writes Emmet Oliver.

The process to choose a new chief executive is fraught with difficulty because the airline's chairman, Mr John Sharman, is himself due to step down shortly.

Finding a chairman is proving highly difficult, with leading executives like Mr Seán Fitzpatrick of Anglo Irish Bank and Mr Niall FitzGerald of Unilever declining to serve. "Getting a chairman has to be the first step, there is no point in addressing the main issue of funding until that is done. The whole thing is very messy," said a source yesterday.

It is not clear whether Mr Sharman will be a member of the sub-committee or whether it will consist of three other board members. The selection of the chief executive is strictly a matter for the board, although the Government has to approve the terms and conditions.

Meanwhile, the outgoing executives have denied weekend reports that they are preparing to run a low-cost airline for British Airways.

One report suggested the three executives - Mr Walsh, chief financial officer Mr Brian Dunne and chief operations officer Mr Séamus Kearney - would soon start working for British Airways chief executive Mr Rod Eddington. Yesterday, Mr Walsh told The Irish Times that the reports were " not correct".

Today will be the first time that the airline's board has met since the three executives announced their decision to step down some time before May. A large portion of the meeting is expected to be taken up with discussion of recent events.

There is also likely to be some discussion about the airline's future fleet requirements. The company is performing well financially and is expected to report operating profits in excess of €100 million for 2004.

Despite the recent upheavals, the airline continues to implement its redundancy programme and 600 staff are expected to depart by the New Year.

The board will face significant difficulties in replacing Mr Walsh. The natural successors, according to most observers, would have been Mr Dunne or Mr Kearney, but both executives say that their decision to leave the company is final.

There are some internal candidates being mentioned at this stage, including Mr Niall Walsh, the services director. However, several senior aviation executives might also take an interest in the position.

The Cabinet sub-committee, chaired by the Taoiseach, is expected to meet again this week.

Most political observers believe that ministers are moving towards approving some form of private sector investment in Aer Lingus. However, ministers have told the unions that they will be consulted before a final decision is made. A recent Goldman Sachs report favoured a floatation as the most practical way for the airline to raise funds towards its expansion.

The unions have long argued that State investment in the airline should not be ruled out. However, any State investment is likely to be challenged by Aer Lingus competitors such as Ryanair.