independent

Sunday 20 April 2014

Walsh to slash 4,500 Iberian staff as IAG battles Spanish slump

FORMER Aer Lingus chief executive Willie Walsh has unveiled plans to axe 4,500 jobs at Spanish airline Iberia as the carrier reels from the effects of the country's damaged economy and the impact of discount carriers including Ryanair.

Mr Walsh, the chief executive of Iberia and British Airways owner IAG, revealed the plan yesterday, prompting an angry response from unions. They've already threatened strike action and have said staff are being punished for management failings. The cuts represent just over a fifth of Iberia's workforce.

IAG is to eliminate 25 aircraft from the Iberia fleet in order to cut its capacity by 15pc next year. That will include five long-haul aircraft and 20 short-haul.

Salaries for staff on short-haul services at Iberia will also be reduced to match those of staff at low-cost airlines. That's likely to involve pay cuts of between 25pc and 30pc.

Thirteen routes that between them are losing €100m every year will also be terminated.

IAG said it has already begun talking to unions and wants to complete talks by January so the changes can be in place in time for next summer.

"If unions fail to engage in negotiations, or engage in strike action, or fail to reach agreement by the deadline, we will implement further capacity reductions in order to preserve the viability of Iberia," said IAG.

"We want Iberia to be strong and successful," Mr Walsh said. "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."

"Time is not on our side," he added.

Survival

Iberia chief executive officer Rafael Sanchez-Lozano said Iberia is fighting for its survival and has lost money in all the markets in which it operates. He said the company is currently losing about €1.7m every day.

IAG will focus on developing low-cost carrier Iberia Express, which launched earlier this year and which IAG said is performing better than expected.

This week, IAG also tabled a €113m offer to buy the 54pc of Spanish low-cost carrier Vueling that it doesn't already own through Iberia.

Within the past couple of years, Willie Walsh has also implemented sweeping restructuring at British Airways.

IAG said yesterday that operating profit in the third quarter to the end of September fell to €263m from €270m a year earlier, even as revenue climbed 12.6pc to €5.05bn in the period. Fuel costs rose nearly 21pc to €1.66bn.

Irish Independent

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