The Irish government on Wednesday decided in principle to sell a majority shareholding in state airline Aer Lingus.
In announcing the news after a cabinet meeting, Transport Minister Martin Cullen said: "The government will retain a significant stake to protect the state's key strategic interests in the national airline."
He said the government will appoint financial advisors to advise the government on the size, type and timing of the Aer Lingus sale transaction.
The announcement ends months of ministerial debate over the flag carrier, which has successfully dragged itself back from a brush with bankruptcy in 2001 by realigning itself as a low-fares player.
Cullen said: "This decision allows Aer Lingus to secure funding for new aircraft and in turn to compete and win new routes."
"Aer Lingus flying to and from more destinations means the national airline can offer greater choice to consumers, open new markets for Irish tourism and grow jobs," he said.
Aer Lingus lost much transatlantic business after the September 2001 attacks in the United States. It has since cut costs by 30 percent and axed 2,000 jobs or a third of its workforce.
In April it reported a 30 percent rise in 2004 operating profit to EUR107 million (USD$135.6 million).
Although the airline's business is concentrated in short-haul, it sees opportunities in the long-haul market, particularly on the Irish-American transatlantic route.
But this would require more investment in long-haul aircraft, necessitating substantial funding.
An independent report last year said a full sale of the company was unlikely to succeed given tough market conditions for full-service carriers.
Unions at the carrier are also fiercely opposed to full privatization.
The long awaited details spelling out the future of Aer Lingus were accompanied by the confirmation of a second terminal at Dublin Airport.
"The Dublin Airport Authority will commission Terminal Two. An open tender competition, overseen by an independent expert panel, will select an operator for the new terminal," Cullen said.
