The on-off sale of Iberia, the Spanish national airline, is finally back on after the Spanish government finally resolved its valuation dispute over Iberia and agreed to sell 40% of the company to a consortium of trade shareholders for E1.1bn ($1.13bn).

The resolution of the dispute has given the green light for the sale of a further 54% stake in an IPO led by Merrill Lynch and Banco Santander Central Hispano. The IPO had originally been lined up for the fourth quarter of last year, but was postponed several times by Sepi, the Spanish privatisation agency. After a fall in profits last year of more than 50%, British Airways and American Airlines, two of a group of investors which have bought 40% of the airline, had argued that the proposed valuation should be cut. This put the IPO on hold and shunted into this year at the earliest. Sepi has now agreed to cut the valuation by 20%. Merrill and BSCH are now considering a sale as early as next month, which will be worth a minimum of E1.45bn. The global co-ordinators are not, however, getting carried away. One source said: "Nothing is ever certain with this sale, and we are not going to confirm a date until Sepi puts a date in the calendar.' The Iberia sale is the first European airline deal scheduled for this year and is expected to be followed by further sales by other national carriers. Norway, Sweden and Denmark are considering unifying and selling SAS. Alitalia and Air France are both planning secondary sales, while Aer Lingus and EasyJet are also considering equity issues this year.