The Government has reopened negotiations with Brussels on state aid for Aer Lingus, just days after the Minister for Public Enterprise appeared to rule out the option.

Ms O'Rourke told the Dβil on Tuesday that the European Commission was "opposed to the State providing any support in any form to Aer Lingus". But a spokesman for the Minister confirmed yesterday the issue was being explored once again.

He said the Government's position remained that of bringing about a rescue through the facilitation of private investment in Aer Lingus, but the option of state aid had to be explored in case this was not successful.

Government sources have said that a group of Irish investors have taken soundings on Aer Lingus, but the Department spokesman said that, at this stage, neither the Department nor the company has been approached.

The Government has authorised Aer Lingus to sell up to 35 per cent of its equity to outside investors to fund a £150 million-plus (€190 million-plus) restructuring package.

The decision to revisit the possibility of state aid indicates serious concern in the Government that it might not be possible to find an investor in the time frame required. The most likely candidates - large airlines such as BA - are all facing their own difficulties. Private investors would also be reluctant to get involved. Aer Lingus is due to run out of cash by early next year and a deal has to be tied up within weeks.

The Government's insistence earlier this week that Brussels had blocked state aid to Aer Lingus took senior officials in the European Commission by surprise. The package put before the Commission last week did not offer details of any proposed investment, or loan guarantees, and no other information has since been put forward by the Republic, Brussels sources said.

Last week, a senior source told The Irish Times that the Commission would treat seriously any application by the Government to either invest money in Aer Lingus, or to guarantee a loan to the airline. But he warned that the Government's help would have to abide by rules that would require Aer Lingus to be able to produce profits "within a reasonable period".

However, the remarks were immediately questioned by the Department of Public Enterprise, which insisted that the Commission had taken a much tougher line in its meeting with Irish officials last Friday.

Crisis at Aer Lingus: page 3