Shares of online travel platform eDreams Odigeo were suspended by the Spanish stock exchange on Friday after a dramatic decline in the conglomerate's share price.
In a statement, the La Comisión Nacional del Mercado de Valores said it suspended trading of the shares as an act of caution with immediate effect so that the company could attend to the circumstances around its 59% single-day price collapse.
The stock closed at euro 1.02, about a tenth of what it was at the April initial public offering.
The move came after British Airways and Iberia said on Friday they were pulling their airfare inventory from a few of the conglomerates brand platforms, "effective immediately," due to a trade dispute.
UPDATE SATURDAY 25 October:
eDreams Odigeo has released a statement saying that the dispute has been (mostly) settled and that British Airways and Iberia flights are now again on the two largest sites out of the three from which they had been removed 24 hours ago.
Also, eDreams ODIGEO has decided to continue offering Iberia and BA flights to its customers.
Other factors at play?
As Tnooz reported in August, eDreams Odigeo shares have been struggling for months to escape a post-IPO nightmare that was due to several factors, including what the company describes reduced visibility in search results after Google changed its search algorithm.
The company's revenues have plummeted while its debt has soared, as noted by news site Hemerotek.
The turmoil might also have something to do with its formation by the two private equity companies -- Ardian, Permira, and its executive team -- came while Expedia Inc and Priceline Group looked to consolidate and bolster their positions in Europe with their respective moves into metasearch, plus the continued and overwhelming dominance of Booking.com.
The company's multi-brand formation in the past decade-- eDreams, Opodo, Go Voyages, Travellink, and Liligo -- had not set the world alight. The conglomerate may have perhaps been looking for some kind of liquidity event to reignite it.
Short selling and computerized trading by the hedge fund Steadfast Capital and other large investors may explain Friday's sudden selloff, according to the Spanish press.
There has been speculation in recent months that the Odigeo brand was eyeing a move into a metasearch model as a response to increased competition.
Increased softness in eurozone economies hasn't helped online travel agencies as a category, either.
Airlines increasingly feel they have the upper hand
The airline groups claimed eDreams Odigeo had broken ticket price transparency agreements.
The decision came, according to an e-mailed statement:
"...after negotiations failed to make such websites comply with its contractual obligations of information and with the Spanish and European legislation that protects consumers".
"We have negotiated tirelessly with Odigeo since many weeks ago to try to reach an agreement that protects our customers and respect the obligation to report the price with transparency," said Victor Moneo, sales director of Iberia and British Airways in Spain.
Luke Goggin, director of sales for British Airways in Europe and North Africa, said also in a statement: "British Airways and Iberia have negotiated with Odigeo relating to non-compliance with the IATA resolutions and laws with unsatisfactory results."
"Accordingly, we have decided to close access to the inventory and the possibility of issuing tickets to web pages that remain unfulfilled."
Wild ride
The airlines claimed, in an e-mailed statement, that edreams.es, opodo.fr, and edreams.com were "not fulfilling [the company's] obligations to transparently report total ticket prices to clients from the start of the booking process."
See this example, a graphic created by Jaime Novoa at Spanish analysis site Novobrief:
UPDATE 25 October: eDreams Odigeo responds:
EDreams Odigeo has released a statement pointing out that British Airways and Iberia ended fare distribution on only 3 out of its 67 websites, affecting 1.42% of bookings, and that talks are ongoing.
"Contrary to the announcement by BA and Iberia today, the core issue at stake has nothing to do with compliance, but with commercial negotiations between Iberia and BA relating to the intention to impose a new distribution policy on IATA Travel Agents and, in respect of which, eDreams ODIGEO has engaged with Competition Authorities in several jurisdictions."
"eDreams ODIGEO operates several websites in Europe and cooperates fully and at all times with European consumers protection authorities....
"In addition, it is the Company’s opinion that BA and Iberia have consciously failed to mention that the negotiations with eDreams Odigeo were mainly focused on the new distribution policy that British Airways and Iberia are seeking to impose on Odigeo and other IATA Travel Agents that raise critical issues in terms of Competition Law."
Tnooz has been told the company will release a statement shortly.
Long and winding road
EDreams Odigeo was touted as a European powerhouse when it was born. The conglomerate was born out of an Amadeus spin-off. A key recent expansion was when Odigeo acquired travel search firm Liligo from French national rail operator SNCF.
British/American COO CEODana Dunne happens to be scheduled to appear at the annual PhoCusWright Conference in November in Los Angeles and many watchers will be eager to hear what he has to say.
AUGUST 2014: Down 60%, eDreams Odigeo shares try to escape post-IPO nightmare