Colin Baker MADRID
Iberia's initial public offering (IPO) may not have been a great success in terms of sale price, but management is already exercising its new-found freedom from state control with plans for a major corporate restructuring.
This will see Iberia set up as a holding company as of January 2002, providing a level of autonomy for the different company divisions. Iberia chairman Xabier de Irala is hopeful of attracting outside investors for some of these, with the company's handling interests a likely candidate. Iberia has a strong home market and third party business that would be attractive to the major ground handling players, which are in an expansionist mood. Obvious candidates include GlobeGround, Swissport and Menzies. Handling accounted for 5.3%of Iberia revenues in 2000, cargo for 5.8% and maintenance for 2.7%. Passenger transportation accounts for 79.1% of the company's turnover.
De Irala describes the move towards a holding structure as "the final phase in the turnaround". Analysts agree that Iberia has recovered remarkably in recent years, but bemoan the timing of the IPO. This was initially pencilled in for 2000, but poor market conditions, failed merger talks with Air Europa and pilot unrest had threatened the launch.
In the run up to the start of trading in early April, state-holding company SEPI was forced to cut the share price by c0.78 (70ó) to c1.19, as well as boost the retail element of the sale due to lack of interest from institutional investors.
In a further twist, British Airways and American Airlines, with 9% and 1%share holdings, respectively, will share a $90 million rebate, having agreed a compensation deal with SEPI if the offer price was lower than the price they originally paid for their stakes. The IPO price valued the company at Ptas181 billion ($980 million), compared with the Ptas454 billion originally paid. Spanish investors want similar compensation.
De Irala puts the lower than expected offer price down to bad luck. "We did not do the IPO in the most stable environment, but we did it, and that is important," he says.
Meanwhile, the lock up period on Iberia's 18.3%stake in global distribution system provider Amadeus ended in February. But De Irala insists there are no immediate plans to disinvest.
Source: Airline Business
