Spain's government postpones IPO for airports operator Aena

* Planned Aena IPO put off until early 2015

* Share sale promised to be biggest in Europe this year

* Process has to be completed by April 16 or started from scratch (Adds source, new timing)

By Carlos Ruano and Robert Hetz

MADRID, Oct 30 (Reuters) - The Spanish government has decided to postpone the flagship privatisation of airport operator Aena via a $10 billion share listing until the first months of 2015, two sources with knowledge of the matter said on Thursday.

The sale of a 49 percent stake in the world's biggest airports operator had promised to be the largest share sale in Europe this year. With an albeit small part of the share offer directed at retail buyers, it was also seen as a key test of Spanish investors' faith in the country's economic prospects.

State-owned Aena, which operates 46 airports in Spain as well as having interests in airports in Mexico, Colombia, Cuba, Angola and the UK, had been aiming for its shares to make their market debut on Nov. 12.

But renewed doubts over the strength of Europe's economic recovery and a flagging market appetite for new listings after plentiful offerings earlier in the year have blighted the prospects for a successful sale.

"The operation is postponed until a technical flaw that was identified can be resolved," the source said on condition of anonymity. The "flaw" relates to a tender not being organised to pick an auditor to sign off the so-called comfort letter needed for the prospectus, the source said.

A second source said a tender would be held shortly to pick an auditor.

The delay to the sale is a blow to the government ahead of a general election due next year and after some officials insisted as recently as this week that problems in preparing for the share offer would be resolved in days.

It also follows many months of laying the ground for the sale, including television and radio advertising the impending share offer to the public.

Though Spain's public listings market took off again earlier this year following a three-year drought, coinciding with the country's emergence from recession, companies had not yet sought to target retail investors.

Many were burned in 2011 by the 3 billion-euro share offer for Bankia which then had to be bailed out by the state a year later, wiping out the investments of the hundreds of thousands of ordinary Spaniards who had been urged to buy the shares.

NEXT STEPS

Spain's government now has a window of around six months to try and reactivate the Aena share offering, or else it faces starting from scratch at a later stage.

It had already provisionally placed 21 percent of the airports operator with three 'cornerstone' investors - Spain's Corporacion Financiera Alba fund, British fund TCI and infrastructure group Ferrovial.

These three are committed to going ahead provided the sale is completed by April 16 including the broader share offer.

The share offering had already experienced some hiccups, with Aena delaying the filing of the offer prospectus last week.

Company officials said at the time that the government was likely to give the go-ahead for the offer on Oct. 31 but sources familiar with the matter said on Thursday that senior government officials were still divided on pricing and therefore whether the IPO should go ahead at all.

Alvaro Nadal, senior economic adviser to Spanish Prime Minister Mariano Rajoy, had earlier this week called the pricing range "more than reasonable", while insisting there would be no going back on the privatisation.

Aena said on Thursday it was not aware of any suspension while the economy ministry, the treasury ministry, the public works ministry and Prime Minister Mariano Rajoy's office all declined to comment.

The Spanish government had initially considered a 5 billion-euro ($6.3 billion) valuation for Aena. But the price at which the three anchor shareholders offered to buy into the airports operator valued it at between 7.3 billion and 8 billion euros, higher than originally anticipated and raising some concerns it could be seen as expensive.

A public body advising the government on privatisations last week outlined a preliminary price range implying an equity value of between 6.2 billion euros and 8 billion euros.

Based on these figures and including debt of 12 billion euros, the group would have an enterprise value of 18.2-20 billion euros, or 11.7 to 12.8 times its 2013 earnings before interest, tax, depreciation and amortisation (EBITDA).

That's higher than the group's main European competitors with Germany's Fraport valued at 10.7 times EBITDA at the end of last year and France's ADP valued at a multiple of 10.5, according to Thomson Reuters data.

(1 US dollar = 0.7929 euros) (Additional reporting by Paul Day, writing by Sarah White; Editing by Julien Toyer, Greg Mahlich, Susan Fenton)