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Iberia to create new short/medium-haul airline – report

Analysis

Iberia is planning to establish a new airline to operate its short- and medium-haul services, as part of cost cutting plans, according to a report in the Financial Times.

Iberia joins Air France-KLM, Austrian Airlines, British Airways, Japan Airlines and many other legacy carriers that are considering radical overhauls of their short- and medium-haul operations in response to structural changes in the market, particularly for premium seats.

According to the report, Iberia plans to focus on more lucrative long-haul routes, mainly to Latin America, where it this week reached a comprehensive codeshare agreement with Brazilian LCC, GOL. Iberia plans to implement the changes by 2011. The airline's shares eased 1.9% yesterday.

Elsewhere, British Airways' shares slumped 4.1% and Air France-KLM fell 3.1%. Lufthansa eased 1.5% as JetBlue revealed a net profit of USD15 million for the third quarter, slightly below market expectations. Lufthansa currently holds a 19% stake in JetBlue.

Europe selected airlines daily share price movements (% change): 22-Oct-09

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