Spanish state holding group SEPI has postponed the proposed flotation of its 54% equity stake in Spanish flag carrier Iberia. The initial public offering (IPO), which has been rescheduled three times, is due to take place in October or November.
The reason given for the postponement is the low value of shares in other publicly quoted European airlines, which took a battering during a tough trading year in 1999 and are yet to recover.
Earlier valuations for Iberia had to be revised downwards, from Ptas580 billion ($83 billion) to Ptas454 billion, which resulted in institutional investors Caja Madrid, BBVA, Logistica, El Corte Inglés and Ahorro Corporación paying 28% less than expected.
While American Airlines and British Airways initially agreed to this new price for their own combined 10% stake, they negotiated the right to pay the same price as shares sold under the IPO, if this turned out to be lower.
Furthermore, potential shareholders cannot have reacted positively to the news that the pilots' union, Sepla, has refused to surrender its seat on the board of directors, to which it has a constitutional right. Iberia has been dogged by labour unrest in recent years and if this matter is not cleared up quickly it could further damage investor confidence.
Source: Airline Business