Aer Lingus has reversed an earlier decision to end flights between Shannon Airport and London Heathrow and will resume the service from March 29, with one-way introductory fares available at €19.99.

The airline's chief executive Dermot Mannion rejected claims that the move was in response to a government threat to sell its 25 percent shareholding to Ryanair if the Shannon link wasn't reopened.

Mannion said the decision was rooted in recent agreements with staff to opt for alternative cost saving measures, including work practice changes and new work agreements at Shannon, Cork and Dublin airports. The recent considerable reduction in the price of fuel was also a consideration.

Mannion said that the airline now had a radically restructured cost base at Shannon which copper-fastened its long-haul service at the airport on a year-round basis and provided a platform to re-launch short-haul services. He said that the company hoped that the Heathrow service would be profitable from the end of the first year.

There will be two daily round-trip flights - one in the morning and one at night - on weekdays and one round-trip on Saturdays and Sundays.

The move has been widely welcomed by the government, Opposition and tourism and business interests, particularly in the mid-west.

Transport Minister Noel Dempsey said: "The restoration of global connectivity for the mid-west region is all the more important now in these particularly difficult economic circumstances."

Dempsey also welcomed the development of a new Aer Lingus base at Gatwick near London and said he was pleased that the airline was to resume its operations at Ireland West Airport in Knock.

Main Opposition spokesperson Olivia Mitchell of Fine Gael said, "Irish tourism will undoubtedly benefit from this decision. An aggressive marketing package is now needed to harness the airport's competitive advantages.

The airline's announcement came at the same time as it formally urged shareholders to reject a recent €1.40 per share offer for the airline from Ryanair.

An Aer Lingus statement said the offer significantly undervalued the company and misrepresented "the significant progress of Aer Lingus since its flotation in 2006."

Aer Lingus had stopped the Heathrow route last January after nearly 60 years in operation and moved the service to Belfast International Airport.

Ryanair had promised to reopen the route should its €525 million bid for Aer Lingus be successful.