Bloomberg News

IAG Starts Process to Cut Iberia Jobs Ahead of Union Strike

February 12, 2013

International Consolidated Airlines Group SA said it initiated the possible elimination of 3,807 jobs at Iberia as it tries to restructure the unprofitable Spanish carrier.

“Iberia has today informed its employees, trade unions and the Spanish employment ministry that it has started the formal process of collective redundancy,” London-based IAG said in a statement. A 30-day consultation process now starts, it said.

IAG Chief Executive Officer Willie Walsh wants to shrink Iberia operations by 15 percent and is moving ahead with reductions after the rejection of proposals that would have limited job losses to 3,147. Iberia’s union has called for 15 days of strikes starting Feb. 18.

“The number is a bit higher than expected and shows Walsh will be as aggressive in restructuring Iberia as he has to be,” Robin Byde, London-based analyst at Cantor Fitzgerald said. “The strike will go forward, but so will the job cuts.”

IAG shares rose 0.3 percent to 216.80 pence at 2:50 p.m. in London trading.

Union Agreement

“This is part of Iberia’s transformation plan to introduce permanent structural changes across the airline to stem its losses, enabling it to grow profitably in the future,” IAG said today. The company was created in 2011 through a merger of British Airways and the Spanish carrier.

Iberia said it is “keen to reach an agreement with the unions.” The airline urged labor groups “to settle disputes at the bargaining table rather than involving customers through strikes that can only aggravate the airline’s loss-making situation,” it said in an e-mailed statement.

Employees let go would reduce redundancy packages that include 20 days of pay for each year of service capped at a maximum of a year’s salary, an Iberia spokeswoman said. She said the number of job losses could be reduced if unions agree on pay cuts and productivity increases.

Walsh said in November that job losses at the Madrid-based unit could reach 4,500 positions after third-quarter profit fell 25 percent. The final offer rejected by unions called for the elimination of 3,147 positions with wage concessions.

IAG is seeking a 600 million-euro ($806 million) turnaround in earnings by 2015 at Iberia, which lost 262 million euros in the first nine months of last year. IAG reports full-year results on Feb. 28.

Iberia said it is working on minimizing the impact of the strikes on passengers, including through ticket refunds and allowing changes in travel dates.

To contact the reporter on this story: Robert Wall in London at rwall6@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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