IAG Announces Iberia Airline Retructure Plan

International Airlines Group (IAG), the parent company of British Airways and Iberia, has announced its plans to restructure Iberia.

The company has announced a comprehensive plan to restructure the airline, which includes the axing of 4,500 jobs, reducing the network capacity by 15 percent in 2013, and removing around 25 aircraft from the fleet.

The company has issued a statement, which says, ‘In the short term the transformation will focus on stemming the losses and creating a profitable route network. This will include suspending loss-making routes and frequencies and ensuring there is effective feed for profitable long haul flights.

As well as halting Iberia’s financial decline we will establish a viable business that can grow profitably in the long term. Short and medium haul operations will be transformed to compete effectively with low cost carriers who have successfully established themselves in Iberia’s home market. The plan will see comprehensive productivity improvements and the introduction of permanent salary adjustments to achieve a competitive and flexible cost base.’

Commenting on the restructuring plan, Rafael Sanchez-Lozano, the chief executive officer of Iberia, said, ‘Iberia is in fight for survival. It is unprofitable in all its markets. We have to take tough decisions now to save the company and return it to profitability. Unless we take radical action to introduce permanent structural change the future for the airline is bleak. However this plan gives us a platform to turn the business around and grow.

The Spanish and European economic crisis has impacted on Iberia, but its problems are systemic and pre-date the country’s current difficulties. The company is burning €1.7 million every day. Iberia has to modernise and adapt to the new competitive environment, as its cost base is significantly higher than its main competitors in Spain and Latin America.

Time is not on our side. We have set a deadline of January 31, 2013 to reach agreement with our trade unions. We enter those negotiations in good faith. If we do not reach consensus we will have to take more radical action which will lead to greater reductions in capacity and jobs.’