The Minister for Transport, Martin Cullen, has said he will propose selling a majority stake in Aer Lingus as the best way forward for the airline.
Mr Cullen said he would bring an integrated set of proposals to Cabinet in the coming weeks.
The minister also strongly indicated that the Dublin Airport Authority would be given the job of running the planned second terminal in the capital.
Responding to his remarks, the Tánaiste, Mary Harney, said that it was not helpful for Cabinet colleagues to comment in such a public way.
She said that while she favours competition at Dublin Airport, the issue is one for Cabinet to decide, and one which must be agreed upon promptly.
The country's largest union has said Irish people should be very concerned about the possibility of Aer Lingus slipping out of the control of the State.
SIPTU General Secretary, Jack O'connor, said the selling off of a majority stake in the airline mooted by Mr Cullen had implications for employment and the development of the economy in the longer term.
Mr O'Connor welcomed suggestions that the State-owned Dublin Airport Authority would be given the go ahead to build the second terminal at the airport.
He said competition needs to be between airlines, not airports, because such competition strengthens the position of stronger airlines to the detriment of the consumer and workers.
