12-Nov-2012 10:03 AM

IAG to cut 4500 jobs at Iberia as part of restructuring plan

International Airlines Group (IAG) announced (09-Nov-2012) plans to cut 4500 jobs at Iberia as part of a restructuring plan which will also see permanent salary reductions and a fleet reduction by 25 aircraft from 156 currently. IAG will reduce Iberia’s capacity by 15%. IAG set 31-Jan-2013 as the deadline for reaching an agreement with unions on attrition and warned unions of “deeper cuts and more radical reduction” if an agreement is not reached. Iberia CEO Rafael Sánchez-Lozano said the airline is fighting for its survival as it is not profitable in any of its markets. Mr Sánchez-Lozano said the airline needs to make difficult decisions now to ensure the future viability of the carrier. Unions previously expected up to 7000 job cuts. IAG CEO Willie Walsh said the cuts will safeguard the airline’s other 15,500 employees. Mr Walsh said, “For too long the narrow self-interest of the few has damaged the long term future for many. We will not hesitate to take the necessary steps to protect the interests of our shareholders, our customers and our employees.”

Transformation Plan Highlights:
  • Iberia’s cash losses to be stemmed by mid-2013;
  • Turnaround in profitability of at least EUR600 million from 2012 levels to align Iberia with IAG’s target return on capital of 12% by 2015;
  • Network capacity cut by 15% in 2013 to focus on profitable routes;
  • Downsizing of fleet by 25 aircraft including five long-haul and 20 short-haul aircraft;
  • Reduction of 4500 jobs to safeguard approximately 15,500 posts across the airline. This is in line with capacity cuts and improved productivity across the airline;
  • New commercial initiatives to boost unit revenues including increased ancillary sales and website redesign;
  • Discontinue non-profitable third party maintenance and retain profitable ground handling services outside Madrid;
  • The transformation will be funded from Iberia’s internal resources.

British Airline Pilots' Association (BALPA) general secretary Jim McAuslan said the association is "dismayed" at the proposed job cuts and salary cuts at Iberia. Mr McAuslan said, "In our view, the proposed measures are highly disproportionate and likely to result in further, deeply damaging industrial disputes in the Spanish flag carrier. It seems that Iberia has spent so much time outsourcing its flying to subsidiary airlines and franchise operators that it is now being forced to turn against its own core operation in Madrid." Mr McAuslan called on IAG and Iberia management to reconsider their proposals and to increase their efforts to reach an agreement with SEPLA. [more - original PR - IAG] [more - original PR - BALPA]

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