IAG CEO Willie Walsh has thrown down a challenge following nine months of losses at Iberia and a 25% fall in third quarter profit for the group. This week he said: “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 necessary steps to protect the interests of our shareholders.”
It looks like Iberia is going through the same medicine that British Airways went through two years ago. The immediate changes are:
- Iberia capacity will be reduced by 15 percent next year
- 25 of Iberia aircraft will be cut
- 4,500 jobs more than one-fifth of the total workforce will be eliminated
- short-haul salaries will be reduced to the levels of low-cost carriers,
- unprofitable routes will be suspended
- Iberia Express will take over an increasing share of Iberia’s short-haul flights
- Vueling, Spain’s second largest airline will become a wholly owned subsidiary through a 113million Euro take-over bid for the remaining 54 percent IAG don’t own. Vueling announced last month that it was expanding its network in 2013 to a total of 100 destinations.
The response to Walsh words and IAG announcements by the Spanish UGT general workers union was a statement that “Iberia is being dismantled,”. IAG has already been in conflict with the Spanish pilots union SEPLA over pay and conditions. Arbitration has failed to solve this. I suspect we are going to see some stoppages and difficulties at Iberia .