The Cabinet has rejected a bid from Ryanair for the 25% government stake in Aer Lingus.

It comes ahead of a European Commission decision on whether Ryanair can take over the former national flag carrier.

Last month Ryanair said it was working to address all competition concerns to get the green light in Europe for its bid.

The low-cost carrier submitted a package to the European Union outlining a number of airlines which they said would commit to open new bases and compete with any Ryanair/Aer Lingus crossover services if the move went ahead.

EU still to rule on bid

The board of the former State carrier had repeatedly urged shareholders to reject the €694 million offer claiming it undervalued the airline.

It also comes ahead of a European Commission decision on whether Ryanair can take over the former national flag carrier. 

Transport Minister Leo Varadkar says the coalition believes selling the Aer Lingus stake would be a bad deal for Ireland.