Iberia prepares to float

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The delayed flotation of a 54% stake in Iberia will start in the last week of November, according to the Spanish flag-carrier's chief executive, Angel Mullor.

The initial public offering (IPO) should raise Ptas300 billion ($2 billion) for Iberia's parent, the state-owned holding group Sepi. The sale marks the final step in the full privatisation of Iberia, which should be complete by the end of the year. In April, Sepi sold a 30% stake in Iberia to institutional investors and in February it sold a combined 10% stake to American Airlines and British Airways. The core investors, Caja Madrid, Banco Bilbao Vizcaya, Tabacalera, Corte Ingles and the Confederation of Savings Banks were due to acquire their shares in late September.

The carrier's finances are suffering, however, due to price wars in Spain, air traffic congestion and labour conflicts. Iberia expects to see 1999 profits slump to approximately half the $268 million originally forecast. It has been forced to cancel more than 800 flights and 100,000 reservations since March because of problems such as labour disputes and the conflict in Kosovo. Iberia has invested Ptas1 billion in advertising and publicity in a bid to recapture lost clients. Pre-tax profits in the first eight months of the year stood at about Ptas15 billion and are expected to reach around Ptas25 billion by year-end. Last year, Iberia made a net profit of Ptas53 billion.

Several one-day strikes in the first half of the year, following a long dispute with pilots, resulted in a loss of Ptas4 billion in the first quarter, compared with a loss of Ptas1.1 billion in the same period of 1998.

Iberia is due to receive financial assistance, however - the European Commission has approved a further Euro120 million ($125.9 million) increase in Iberia's capital. The move is opposed by Spain's privately-owned commercial airlines, who say that such government investment is anti-competitive.

Spain's seven privately-owned commercial airlines will see combined turnover grow by 17% this year to Ptas263 billion, while passenger numbers will increase by 21% to 19.3m, says industry body Aeca. The number of airlines in private ownership will grow by 28 to a total of 137, predicts Aeca.

*ÊOn 1 September, Iberia fully ab-sorbed its subsidiary, Aviaco, involving the transfer of 1,500 workers and the airline's entire fleet of McDonald Douglas aircraft. Iberia already owns 99.94% of Aviaco's total equity and will now purchase the outstanding 0.6%.