4,500 jobs to go at Iberia
IAG has announced plans to cut 4,500 jobs at Iberia as part of a major restructuring of the Spanish carrier.
The airline group, which also owns British Airways, plans to get rid of a quarter of Iberia’s fleet and cut its capacity by 15%, keeping the most profitable routes.
It warned that if unions don’t agree to the cuts by January 31, it will have to take more "radical action which will lead to greater reductions in capacity and jobs".
"Iberia is in fight for survival," said Rafael Sanchez-Lozano, Iberia’s chief executive. "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."
IAG chief executive Willie Walsh added: "We want Iberia to be strong and successful. For too long the narrow self interest of the few has damaged the long term future for the many. We will not hesitate to take the necessary steps to protect the interests of our shareholders, our customers and our employees.
"This turnaround plan is critical for Iberia and for the future of Spain."
The Iberia cuts were announced as IAG reported a drop in operating profit from €351 million in 2011 to €263 million.
Over the first nine months, Iberia reported losses of €262 million, versus a profit of €286 million at BA.
It blamed the weaker performance on Iberia, the impact of Hurricane Sandy, the purchase of Bmi, rising fuel costs and a drop in business during the London Olympics.
"The group performance is coming back to the levels seen in 2011 and this is particularly true if you strip out the Bmi losses of €31 million in the quarter," said Walsh.
"However, there remains a strong difference between the performances of British Airways and Iberia.
IAG expects to make further losses in the remaining three months due to Sandy and is predicting a an overall operating loss of €120 million for the year, excluding any costs associated with the Iberia restructuring.
It has just announced plans to buy Spanish low-cost airline Vueling. See separate story.
Bev
Editor in chief Bev Fearis has been a travel journalist for 25 years. She started her career at Travel Weekly, where she became deputy news editor, before joining Business Traveller as deputy editor and launching the magazine’s website. She has also written travel features, news and expert comment for the Guardian, Observer, Times, Telegraph, Boundless and other consumer titles and was named one of the top 50 UK travel journalists by the Press Gazette.
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