AER LINGUS boss Dermot Mannion will be feeling the heat following the publication this week of dismal full-year results. Losses of €120 million were bad enough but the guidance for 2009 put the tin hat on things for many investors.

Ryanair boss Michael O’Leary isn’t the only Aer Lingus shareholder hopping mad at the revelation that the airline could record an operating loss of up to €55 million this year while its net cash could be as low as €400 million by the year end.

Aer Lingus’s cash pile was twice that level only last June.

Even Aer Lingus’s fuel hedging position is poor. According to Merrion Stockbrokers, the airline is paying $81 per barrel, way above current oil prices.

Three months ago Aer Lingus’s board told investors that Ryanair’s €1.40-a-share bid undervalued the business, and used its huge cash reserves as an ace card.

The share price is now trading at below 60 cent and, with the net cash disappearing quicker than exchequer revenues and the recession forcing fares down by 10 per cent or more, there’s unlikely to be any relief around the corner.

Mannion refused to apologise yesterday for guidance provided to shareholders during Ryanair’s latest bid.

Looking back, we can’t help wondering why Michael O’Leary didn’t bide his time before pouncing again. His prediction that Aer Lingus’s share price would collapse has proved true, as were his warnings about the cash pile being whittled away and of the yield pressure that his rival would come under.

Surely if he were to have waited until now, Aer Lingus would have found it more difficult to mount a credible defence against a bid.

O’Leary says he will only go a third time if the Government asks him to rescue Aer Lingus.

Rumours of a rift between Mannion and some Aer Lingus board members have begun to circulate of late. Mannion told The Irish Times yesterday that he had an excellent relationship with the board. This might be so but investors increasingly want a tangible benefit from their shareholdings.

Merrion, a former advisor to the airline, has suggested a special dividend or a “positioning of the company so that a fair value could be realised in an executable trade sale”.

Whatever the mechanism, Mannion needs to deliver something meaningful and soon.