The Minister for Transport has said the current offer by Ryanair for Aer Lingus undervalues the airline.

Speaking on RTÉ's Morning Ireland, Leo Varadkar said that Aer Lingus has cash reserves of €700m.

Mr Varadker said the Ryanair bid will be discussed at Cabinet next Tuesday.

Aer Lingus yesterday released a statement, saying Ryanair's bid to take over the company undervalues it.

It advised shareholders to take no action in relation to the offer.

It said management had "transformed" the company into "a robust, profitable airline".

Ryanair yesterday said that it is confident that 50% of Aer Lingus shareholders will accept the offer.

CEO Michael O'Leary said the offer represents a significant opportunity to create one strong Irish airline group.