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Iberia in bumpy take-off
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April 3, 2001: 6:17 a.m. ET
Shares in Iberia slide at the start of trading in stock market debut
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LONDON (CNN) - Shares in Spanish airline Iberia got off to a bumpy start on Tuesday, despite attempts by the government to slash the airline's offer price.
The stock slipped 1.7 percent to touch  1.17 in midday trading in Madrid. SEPI, the holding company that holds the government's 54 percent stake, priced the shares at 1.19 ($1.05) each, valuing the company at 1.1 billion.
That's more than 40 percent below the range set earlier of 1.71 to 1.97.
Prior to the government's decision to cut the price of the offering on Sunday, institutional investors baulked at the IPO price, amid concerns about unresolved labour disputes and an economic downturn.
"The IPO market is particularly difficult at the present moment" as equity markets tumble across the globe, analyst Martin Borghetto told CNN ahead of the pricing.
"Investors are concerned that an U.S. (economic) slowdown and an expected European slowdown would not bode well for earnings," he said.
Late on Sunday, SEPI increased the number of shares earmarked for individual investors to 61.8 percent of the shares available. Institutional investors in Spain and abroad would be offered 32.6 percent -- slightly less than before -- and employees of the airline would receive the remaining 5.6 percent.
Iberia was worth 2.8 billion in 1999, when a group of investors including British Airways, American Airlines and Banco Bilbao Vizcaya Argentaria bought a 40 percent stake.
Iberia's valuation also includes an 18 percent stake in travel reservation company Amadeus Global Travel. Analysts have argued that between half and three-quarters of the value of Iberia is made up by its holding in Amadeus.
Still, Iberia's chairman Xavier de Irala Estevez told CNN on Monday that the company was a solid investment, with more than 200,000 Spaniards buying the company's stock.
Iberia operates in "very solid growth markets between Spain and Europe and Spain and Latin America," he said.
The company was forced to sell its investments in Latin American airlines after racking up huge losses more than five years ago. 
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