Shares of Mexico's state-owned airline company Cintra dropped 20 percent on Tuesday after only two bidders made offers in the privatization of carriers, Aeromexico and Mexicana.

The airlines were put up for sale earlier this year and at first drew broad interest, but most potential bidders have since pulled out, including Spain's Iberia and Icelandair.

Cintra said that two bidders were left, raising investor concerns that the sale price would either be much lower than earlier hoped or that the government would cancel the privatizations.

"The probability has increased that one of the two sales is called off, and also that the price is below the market's valuations," said Pablo Ruiz, an analyst at the Vector brokerage in Mexico City.

Analysts said Cintra's market value was around MXP7.9 billion pesos (USD$740 million) in early November, as bidders prepared their offers.

"As there are only a few players, there is a higher probability that the auction is called off," said Luis Antonio de Leon at Banif Securities in Mexico City.

The remaining bidders are Grupo Posadas, Mexico's leading hotel firm, and Grupo Xtra, led by businessman Isaac Saba.

Grupo Posadas and Grupo Xtra each bid for both Aeromexico and Mexicana, although they can only get one under privatization rules.

The government has set a minimum reference price for the privatizations and can reject the bids. It said it would evaluate the bidders' technical proposals over the next week and open their financial offers on November 29.

Cintra's stock surged in late 2004 and early this year as it pushed ahead with the sell-off plans, but it is now down almost 30 percent in 2005 and has fallen nearly 40 percent from its all-time high in late August.

Aeromexico and Mexicana were brought under government control after they went bankrupt in the mid-1990s. The airlines controlled by Cintra account for over 60 percent of Mexico's airline industry.

Earlier efforts to privatize the airlines were killed off by the industry wide crisis that followed the September 11, 2001 attacks in the United States.

Under the new privatization plan, Aeromexico is being sold with regional airline Aeroliteral and Mexicana is being packaged with Click, a new no-frills, low-cost carrier.

Some investors were scared away when Iberia pulled out and when Cintra agreed to give a pilot's union 5 percent of the two airlines in return for increased productivity.

Foreign firms were allowed to bid in the privatization but were restricted to a maximum stake of 25 percent.

After years of losses, Cintra turned a slight profit in 2004. It had net earnings of around USD$40 million in the first nine months of this year.