The Irish government agreed to sell its 25 per cent stake in Aer Lingus to IAG, paving the way for the owner of British Airways and Iberia to formally launch its €1.36 billion (£960 million) bid for the Irish carrier.

International Airlines Group’s (IAG) proposed offer for Aer Lingus was recommended by the Irish airline’s board in January, but was held up while the Irish government sought reassurances on jobs, transatlantic services and connections to London.

The deal is still conditional on the backing of Aer Lingus’ other main shareholder, budget airline Ryanair, though some analysts expect this would now be forthcoming.

Buying Aer Lingus will enable IAG to expand lucrative transatlantic services from Dublin airport where there is capacity for it to do so, in contrast to the home of its biggest unit British Airways at London’s Heathrow, which is full.

Formally presenting its €2.55 per share offer, IAG committed to Aer Lingus operating routes from Heathrow to Irish airports for at least seven years, winning over the government.

“Acquiring Aer Lingus would add a fourth competitive, cost-effective airline to IAG, enabling us to develop our network using Dublin,” said IAG chief executive Willie Walsh, saying he was hopeful that Ryanair would see the offer as attractive.

Ryanair still has to declare its hand. It declined to comment again on Tuesday on whether it would accept an offer by IAG for its 30 per cent stake.

Ryanair has now fully written down the value of the stake it owns since a failed takeover attempt, with Cantor analyst Robin Byde saying a windfall from a sale could come in handy for Ryanair.

IAG is due to issue its offer document within 28 days, following which time Ryanair is likely to respond, said Walsh.