21-Jun-2013 2:48 PM

IAG CEO: Iberia situation 'critical', carrier unprofitable and 'must restructure' to survive

International Airlines Group (IAG) CEO Willie Walsh said (20-Jun-2013) Iberia's situation is "critical" and the carrier "must restructure if it is to survive". Mr Walsh noted, "The airline has become unprofitable in all its markets, including long-haul, and its high cost base means it is unable to compete effectively with other airlines, both European and Latin American." Mr Walsh added, "...I cannot stress strongly enough that the situation is critical and that none of us want to see Iberia disappear. However, that still remains a risk unless all parts of the airline work together to transform Iberia." IAG chairman Antonio Vazquez echoed the sentiment, noting, "It costs Iberia twice as much to carry each short-haul passenger than it does for the airlines with which it competes every day. Why is this? For one simple reason, its cost structure is significantly higher than that of its competitors, while its productivity is lower." Mr Vazquez noted the geographic benefit of Iberia's Madrid Barajas Airport hub, saying, "Iberia occupies a privileged geographical position for routes to and from Latin America. Its network is strategically important to IAG, and we have always seen Barajas Airport as a natural gateway to this market. We want to protect this position for the future, and therefore reiterate the urgent need to restructure." On the restructuring process, Mr Walsh called the mediated agreement reached in Mar-2013 "an important first step towards restructuring Iberia" but said that Iberia "needs to do more". Iberia Express is an example of what a lower cost base can achieve, said Mr Walsh, while adding that he is "delighted" former Iberia Express CEO Luis Gallego has taken over as Iberia CEO. [more - original PR]

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