The shares fell within the first half of trading, which began simultaneously on the three European exchanges, falling below the already lower-than-expected issue price of 19 euros (18 dollars) for institutional investors and 18 euros for retail investors.

One of the company's co-chairmen, Rainer Hertrich, said that the low price reflected the unfavourable market conditions rather than the actual value of the company.

When trading began at midday (1000 GMT) on the Paris, Madrid and Frankfurt exchanges, the EADS stock opened at 19 euros, unchanged from the issue price.

In floor trade, the stock quickly fell to 17.50 euros within the first 20 minutes, as investors were concerned about the prospects for the company and the major challenge it faces in building a new superjumbo jet, the A3XX.

In electronic Xetra trade, they dipped to an intraday low of 17.67 euros, but subsequently came back slightly to change hands at 17.71 euros.

Its shares closed down 2.78 percent at 17.50 euros in Paris, down 5.6 percent at 17.00 euros in Madrid and down 4.17 percent at 17.25 euros in Frankfurt.

"The current stock exchange climate is far from perfect. After the recent flood of new flotations, there is a bit of a feeling of saturation, so that any new offering has to have a bit of a 'kick'," said an analyst at WestLB. "EADS doesn't have that."

Investors had yet to be convinced of the case for the A3XX, he said.

"It's all well and good having these new supersize aircraft, but investors are concerned that there isn't really the need for them and they'll never fly at full capacity," he said.

Merck Finck analyst, Pia-Christina Schulze, attributed the decline in the share price to the lack of any significant progress in the restructuring of Airbus.

"EADS owns 80 percent of Airbus, with the other 20 percent in British hands, and there have always been problems in terms of reaching unified decisions amongst the owners," Schulze said. Similar problems were likely to persist in the future.

Schulze also said that investors were worried about the viability of the A3XX.

"Some airlines have indicated that they want to buy, but the project still lacks the bigger airlines like Lufthansa and British Airways as future clients," she said.

Nevertheless, speaking to journalists at the Frankfurt stock exchange, EADS's Hertrich insisted that the share price had "significant upward potential".

His French co-chairman Philippe Camus said the same in Paris.

"We have a positive path ahead of us. Once the market understands all the cards we have up our sleeves ... more and more institutional investors will be interested" in the stock, Camus insisted.

EADS has been formed from the merger of DaimlerChrysler Aerospace (DASA) of Germany, Aerospatiale Matra of France and Spanish state firm Construcciones Aeronauticas (CASA).

The flotation of 166.5 million EADS shares marked the official start of the group's operations.

EADS shares were priced at 19 euros (18 dollars) on Sunday, below the maximum 23 euros set for retail investors by the company last week.

The low price tag values EADS at a total 15.4 billion euros and means that the offering will raise about three billion euros.

The company itself will receive around 1.6 billion euros of this, while the rest will go to the existing shareholders.

Retail investors were allocated around half of the share issue and received a discount of one euro per share, so they paid 18 euros for each share.

EADS staff bought 7.3 percent of the total at a 15-percent discount.

The rest went to institutional investors, where demand had been stronger than expected, but only in the last few days of the offer period.

The overall issue was nearly two times oversubscribed, which means that investors applied for nearly twice the number of shares actually on offer.

Most institutional demand came from Europe and Britain, with US investors showing less appetite for the shares.

But the EADS issue competes this month with flotations of Vivendi Environnement, a utilities group being listed by the French group Vivendi, and France Telecom's Wanadoo Internet subsidiary.

EADS, with annual sales of some 22.5 billion euros, will be the world's third-largest aerospace player behind US groups Boeing and Lockheed Martin. It has an 80-percent stake in Airbus, which hopes to build the 550-seat A3XX jet.

Copyright 2000 AFP. All rights reserved. The material on this page is provided by AFP and may not be published, broadcast, rewritten or redistributed.

DASA

Community
Email This Article
Comment On This Article

Related Links
Space

Memory Foam Mattress Review

SPACE MEDIA NETWORK PROMOTIONS Solar Energy Solutions Tempur-Pedic Mattress Comparison ... Newsletters :: SpaceDaily :: SpaceWar :: TerraDaily :: Energy Daily XML Feeds :: Space News :: Earth News :: War News :: Solar Energy News

SPACEDAILY

Satellite Launch To Boost DTH In India
Calcutta, India (SPX) Dec 28, 2005
The successful launch Thursday of India's heaviest satellite from spaceport of Kourou in French Guyana may have boosted the country's space research efforts to yet another level, but it has also lifted the spirits of at least three Direct-To-Home televisions broadcasters, one of which has been waiting for years to launch its services in India.