IAG Chief Executive Willie Walsh has said he understands Ireland's protection and loyalty to Aer Lingus, but said IAG's deal would be a "growth story" for the airline.

The Dáil is expected to approve the sale of the State's shareholding in Aer Lingus tomorrow.

However, Opposition parties have criticised the deal as a bad one for the country and for the airline's employees.

Outlining details of the takeover bid at a press conference in Dublin, Mr Walsh said the Heathrow slots will remain within Aer Lingus ownership.

Mr Walsh also said he is confident that Aer Lingus shareholders will accept IAG's bid.

He stressed that Aer Lingus will remain an Irish airline and will be managed at the headquarters in Dublin. 

The deal would result in a successful and profitable airline, he said, and it would boost economic growth and create new jobs in Ireland.

Mr Walsh said the issue of union relationships and industrial relations will be the responsibility of Aer Lingus and they would continue to be managed in an effective, honest and fair way. 

Mr Walsh said negotiations with Minister for Transport Paschal Donohoe were "tough, fair and constructive throughout".

He also said he expected Ryanair to act in a "rational way" to its proposed bid.

He said the Dublin-London route was the second busiest in the world and he said the best value of the slots was the operation of the routes into Heathrow.  

However, he would not comment on any new destinations for Aer Lingus, saying he would not name the four extra transatlantic destinations for Aer Lingus until there are talks with airports involved.

Mr Walsh said as an Irishman he is very proud of Ireland and his 25 years at Aer Lingus.

He said leaving the airline was the right decision for Aer Lingus and "for me".

He said he is not coming back to make this offer because of some attachment to Aer Lingus rather because the airline is a good company that will fit extremely well with IAG.

He said this is not a "Willie Walsh initiative" but an initiative made by IAG, which is fully supported by the board of IAG.

Major potential cost savings at Aer Lingus identified

Major potential cost savings at Aer Lingus have been identified in an analysis commissioned by the airline.

RTÉ News understands savings in areas such as ground handling, catering and maintenance were listed in the report.

The analysis was carried out by international aviation consultancy company, Nyras.

Aer Lingus said this afternoon that it commissioned the study and IAG had no involvement in it.

Earlier in the Dáil, Taoiseach Enda Kenny said neither he nor the Minister for Transport has had sight of the internal report.

The document, seen by RTÉ News, states that Nyras worked with Aer Lingus to present its 2015 budget on a "like with like" basis with low-cost carriers Easyjet and Vueling.

The study concludes the airline should set aggressive but achievable targets for short haul cost efficiency at a minimum of €60 million or €5-€6 per seat.

It also makes recommendations for what it terms the "next steps" which identifies potential savings.

The breakdown of these possible savings include: ground handling 20%, catering 25% and maintenance 15% .

The total that could be achieved from these savings was estimated at more than €58 million in the analysis.

According to the report, Aer Lingus' ground handling costs are 30% higher than those of Easyjet and 40% higher than Vueling for each turnaround.

A spokesperson for Aer Lingus said this is "an ongoing benchmarking analysis".

They said the opportunities identified in the benchmarking exercise relate to costs incurred through purchasing third party services and have no bearing on employment in Aer Lingus.

This type of exercise is part of the normal course of business in the highly competitive and international airline sector, the spokesperson said.

Decision best for country - Donohoe

Minister Donohoe told the Dáil that a sale of the State's shareholding in Aer Lingus on the basis of the IAG proposal is the right decision in the interests of the country and of the company.

He said the State has "little or no influence" on Aer Lingus and the airline is no longer the national flag carrier.

He said connectivity, particularly transatlantic connectivity, competition, jobs and the future of the Aer Lingus brand were the factors considered by Government in arriving at its decision.

He gave assurances on employment rights and registered employment agreements at the airline.

The minister said that the airline's chief executive had confirmed its position on Registered Employment Agreements in a letter to him yesterday.

He said the letter also indicates that Aer Lingus will engage in a process of consultation governed by agreed structures with staff and their representatives when any restructuring is required.

Mr Donohoe said that on the issue of connectivity he is convinced that a merge with IAG provides an opportunity to protect Aer Lingus.

He said all London Heathrow slots will be guaranteed and these are guarantees that do not exist at present.

The minister also said the airline’s headquarters will remain in Dublin and that two new transatlantic routes will be in place in 2016.

He said Aer Lingus, as a small carrier competing against larger companies, faces difficult challenges and risks.

He outlined five reasons why the Dáil should approve the sale saying it strengthens the competitive position of Aer Lingus; gives greater certainty around connectivity to Heathrow; it will promote Ireland’s wider connectivity and bring growth to Irish airports; it will create employment; and finally it protects the Aer Lingus brand.

Speaking on RTÉ's Morning Ireland, Mr Donohoe defended the sale and said the Government has "a set of guarantees the State does not have at the moment". 

He said the guarantees, which are for seven years, would hold even if IAG is sold or taken over as they would be written into the Articles of Association of Aer Lingus.

Mr Donohoe also said the Government has had contact with the European Commission in relation to the legal mechanisms, and there are indications it will not oppose those guarantees.

He said he would be not going ahead or looking for the support of Cabinet for the proposed takeover if he was not sure these guarantees were robust.

The Taoiseach said he is confident that the European Commission will approve and endorse the proposal to dispose of the Government's shares in Aer Lingus.