Iberia faces ‘reductions’ as IAG union deal fails

The parent company of British Airways is to press ahead with plans to slash capacity at its struggling Spanish subsidiary after failing to reach a deal with unions.

International Airlines Group (IAG), which has said that Iberia is in a “fight for survival” as it burns through €1.7 million (£1.5m) a day, said it will cut capacity at the carrier by 15 per cent and reduce its fleet to focus on more profitable routes.

Under proposals put to 
unions in November, IAG also proposed cutting 4,500 jobs at Iberia, but it had warned of “deeper cuts and a more radical reduction” in the size of its 
operations if unions did not sign up to its plans.

Iberia racked up operating losses of €262m in the nine months to the end of September, compared with a profit of €286m at British Airways. IAG chief executive Willie Walsh said the group aimed to return its Spanish arm to an “acceptable level of profitability” by 2015.

He added: “We’re disappointed that no agreement has been reached. Iberia is ready and willing to negotiate with the trade unions. We are determined and united to implement the necessary changes to secure the future survival and viability of Iberia”.

Unions representing Iberia’s ground and cabin crews rejected management’s plans for job and salary cuts on Thursday and said they planned five days of strikes in the second half of this month.

Iberia has suffered from rising competition from low-cost 
rivals such as EasyJet and Ryan-air, as well as falling consumer demand in its recession-hit home market, where one in four workers is unemployed.