BA's stake in reservations system valued at $308m

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The Independent Online
British Airways confirmed yesterday that its stake in Galileo International, a worldwide airline computer reservations system, will be valued at $308m by a New York flotation.

The news came as it was revealed that BA and its intended partner, American Airlines, are each to take a 5 per cent stake in the Spanish flag carrier Iberia as part of its privatisation.

The value of the deal was not disclosed, but the British airline is to raise $137m from the sale of shares in Galileo at the offer price of $24.50 a share announced yesterday, giving BA a profit on its stake of pounds 50m. It said it would retain a 7 per cent holding in the business, worth $171m, unless demand forces it to release further shares under the terms of the float.

The public offering will value Galileo as a whole at $2.45bn, which compares with the $3.5bn at which Sabre, a rival and slightly larger computer reservations system, was valued last year when American Airlines floated a 20 per cent stake.

Galileo supplies travel agents operating from 36,000 locations and other subscribers with fare information, reservations and ticket issuing facilities covering 525 airlines. United Airlines of the US, the world's biggest carrier, is the biggest operator to be covered by the Galileo system, accounting for 12 per cent of all the bookings made through it.

The news about Iberia was revealed in a weekend interview with Pedro Ferreras, chairman of SEPI, Spain's state holding company. Mr Ferreras said the BA and American stakes would be "symbolic", as a prelude to the state airline's privatisation process starting at the end of the year. The plan is to float a 50 per cent stake on the Spanish stock market by the end of 1999.

Separately, BA said yesterday it had as yet received no approach from the European Union after a report that Karel van Miert, the competition commissioner, is demanding massive cuts in its transatlantic services as the price for clearing the link-up with American Airlines.