The Irish government do not have to sell EI under direction from EU, it is at their discretion.
FR may or may not go back, only MOL and board of FR will know what their intentions are. MOL may decide to cut his losses, as most parties are not in his favour, yes the Irish government could raise funds to aid the state but the proceeds from the sale of EI would be a drop in the ocean towards the overall scale of the debt etc.
Furthermore, getting approval from the EU is only one hurdle crossed. Irish government have said clearly a big no not for selling their holding and I would anticipate the that staff share holding will be a similar response, as the staff would in the main not prefer FR to control the company. Further down the pecking order is Etihad, who may also not wish to sell but if FR did takeover their shareholding my be of less interest to them depending on which direction FR would take the company.
But they do need to find money to pay off their debts, so why not sell their stake and use the money to do just that and reduce the amount of austerity in the first place...
Frankly, I just see why FR is even interested in EI, since they have very little in common with each other, only that they both have large ops in DUB (which is the only reason)
The staff would also refuse since if EI became part of FR, their T&C and union rights will suffer badly
Eithad might be more willing at the right price however...
But there is nothing stopping FR from buying further shares in EI until they hold majority control by increasingly their offer to other shareholders and then doing what they want with EI (since they would effectively control the airline)
The only way that a FR takeover can finally be stopped is if IAG (who I think would lose out in a FR/EI takeover, although they will gain their LHR slots) if they bought a 30% stake so that (combined with the Government stake) would mean that a majority of the shares in EI are held by parties against any takeover by FR (55% of the shares)