4,000 jobs to go as Iberia fights for life
The owner of British Airways and Iberia yesterday announced plans to axe more than 4,000 jobs, sell off planes and cut routes at the Spanish airline, admitting its loss-making purchase was in a "fight for survival".
International Airlines Group, formed from the merger of BA and Iberia last year, is to fire more than a fifth of Iberia's workforce and warned, in terms reminiscent of chief executive Willie Walsh's tough negotiations with BA unions in recent years, that cuts would go deeper if the unions do not agree by 31 January.
IAG said Iberia was "burning €1.7m (£1.4m) every day" and was "un- profitable in all its markets".
The airline's struggles stem from its home country's deep recession and severe unemployment. Mr Walsh, who faced years of strikes with the Unite union over his restructuring plans at BA, said of Iberia yesterday: "For too long the narrow self-interest of the few has damaged the long-term future for the many. Time is not on our side. The Spanish and European economic crisis has impacted on Iberia, but its problems are systemic and pre-date the country's current difficulties."
The warning came as IAG cut full-year forecasts and said it will post a €120m (£100m) operating loss for 2012, after a surprise profits warning in August when it downgraded expectations from breaking even to posting "a small operating loss" this year. It said the annual loss included the impact of Hurricane Sandy, which triggered mass flight cancellations.
But the loss is mainly because of the headwinds at Iberia: for the nine months to October, IAG reported a pre-tax loss of €169m as BA's €286m operating profit was wiped out by Iberia's €262m loss plus the costs of turning around its purchase of regional airline BMI this year.
The loss compares with a €394m pre-tax profit the same time a year earlier.
Yet Mr Walsh claims he has no regrets about buying Iberia just before Spain's economy collapsed. He said this summer: "We knew there were challenges in Iberia, and the economic environment has accelerated the need to tackle them."
When creating IAG, he said the airlines group deliberately had a vague name in order to buy up other airlines. After acquiring BMI from Lufthansa for £172.5m this year, IAG has now mounted a €113m bid to take full control of Spanish budget carrier Vueling, up from its current 46 per cent stake.
IAG shares ticked up 2.6p to 170.6p.
- 3 Alton Towers crash: Four seriously injured and 16 guests trapped as Smiler ride carriages collide
- 4 Ann Summers survey reveals the UK's favourite sex position
Man on naked bike ride gets ejected after becoming aroused
Caitlyn Jenner's mother Ester thought her daughter, formerly known as Bruce Jenner, had transitioned for money
Charles Kennedy 1959-2015: A gifted, compassionate politician whose career was cut short by the 'demon drink' - latest news
Alton Towers crash: Four seriously injured and 16 guests trapped as Smiler ride carriages collide
Charles Kennedy dead: A guy once asked the Lib Dem leader who his favourite Muppet was and his letter response was wonderful
Thousands of teenage girls enduring debilitating illnesses after routine school cancer vaccination
Migrants in Kos: Photos show real tragedy after Brits abroad complain of 'awkward' holidays
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
Michael Gove determined to scrap the Human Rights Act – even if Scotland retains it
Threat to scrap Human Rights Act could see UK follow Nazi example, warns UN official
Church of England 'one generation away from extinction' after dramatic loss of followers
iJobs Money & Business
£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...
£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...
£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...
£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...