The Minister for Transport, Martin Cullen, and Aer Lingus have formally announced that they intend to float the airline on the stock market in late September.
In a statement they confirmed the privatisation would be used primarily to finance expansion of Aer Lingus' short haul and long haul fleet.
The Minister for Finance will retain a shareholding of at least 25.1%.
The flotation documents will include a provision to secure the valuable landing slots at Heathrow.
The State and shareholders representing 5% of the company will be able to block the sale of the slots.
There will also be a €100m top-up to the Aer Lingus pension fund and there will be additional contributions from workers and the airline to fund retirement commitments.
Although SIPTU says it is opposed to the flotation and has called upon the Taoiseach to intervene there is little sign it will strike over the issue.
If the stock market remains stable over the coming weeks it is likely the flotation will proceed on 29 September.
Today's news comes against the backdrop of more turbulent times for international aviation, with higher fuel costs and heightened security concerns.
More recently, there have been delays in the introduction of a more flexible flying schedules between Ireland and the US, where Aer Lingus is keen to grow its business.
The flotation of Aer Lingus is primarily targeted at institutional investors. It is almost certain that members of the public looking to own a stake in the airline will need a minimum of €10,000 to invest.