Aer Lingus staff will receive a pay rise of 3 per cent, lump sum payments of up to €4,400 depending on service and a new 7.5 per cent profit sharing scheme following the airline's flotation in the autumn.

Details of the pay rise of 3 per cent, which is in addition to the 10 per cent recently agreed as part of the national partnership agreement, were included in a final offer made by airline management in talks ahead of the flotation.

The airline has agreed that up to 7.5 per cent of its profits each year will be transferred to the Employee Share Ownership Trust (Esot) to buy shares. This will ensure that the unions at the airline avoid having their stake diluted from its current 14.9 per cent. The Esot will also retain its full voting rights.

The 3 per cent pay increase will take effect one month after the airline's initial public offering (IPO). The lump sum payments range from €400 to €4,400, depending on how many years of service an employee has. Employees with five years' experience will get a €2,400 lump sum for instance, while those with 25 years will get €4,400. The lump sum payments will only be paid once targets at local level are met.

The management has agreed that fixed-term or contract employees will not exceed 25 per cent of the workforce in any department and all outsourcing plans have been scrapped.

The offer has been presented as a "full and final settlement of all outstanding pay claims".

The two main unions, Impact and Siptu, have been provided with a copy of the final offer and are studying the contents. The two unions are expected to put the proposals to their members in ballots. Impact is not opposing the IPO, but Siptu is strongly against privatisation.

It is reported that Aer Lingus chief executive Dermot Mannion has written to Siptu national industrial secretary Michael Halpenny saying that management is prepared to calculate the number of fixed-term contract employees in each department to make sure that this does not breach the 25 per cent rule.

An employee charter governing the relations between management and unions has also been circulated.

In addition to the inducements, two supplementary funds are to be set up, to address the deficit at the Irish Airlines (General Employees) Superannuation Scheme, which Aer Lingus staff are members of.

The first fund will consist of €70 million raised from the IPO, while the second fund will consist of €34 million also raised from the flotation. Employees are also being asked to increase their pension contribution by 2 per cent. The company will increase its contribution by an additional 4 per cent.

The airline has said that anyone employed before the IPO will not face "less beneficial conditions of service or remuneration" following the listing of Aer Lingus shares on the stock exchange.

The airline's prospectus is said to be close to completion, although it is likely to undergo further drafting in the run up to the IPO.

The floatation is expected in the autumn but volatile market conditions could delay it further.