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Iberia orders A350s as redundancies are agreed

Indications are that International Airlines Group (IAG) is beginning to succeed in bid to transform the loss-making Iberia into a financially solvent airline. Amongst a flurry of announcements at the end of last week, IAG confirmed that the Spanish carrier had made an operating loss of €95m in the first six months of the year.

Indications are that International Airlines Group (IAG) is beginning to succeed in bid to transform the loss-making Iberia into a financially solvent airline.

Amongst a flurry of announcements at the end of last week, IAG confirmed that the Spanish carrier had made an operating loss of €95m in the first six months of the year.

While this might not sound particularly encouraging, in the same period last year the airline made a loss of more than €550m and in 2012, its restructure and losses wiped out British Airways profits and saw the newly combined group make a loss of close to €1bn.

The dramatic improvement in the firm’s losses is attributable, in part, to its ongoing restructure. After difficult negotiations with trade bodies over redundancies last year – which resulted in disruptive strikes – IAG has just announced a much more successful round of discussions with unions. 

Bodies representing pilots and ground staff have agreed to a further wave of redundancies that will see up to 1,427 jobs cut in the coming months. When added to the 3,141 redundancies made last year, IAG has now achieved its original aim of cutting 4,500 jobs.

Ever bullish, IAG’s CEO Willie Walsh said: “Iberia’s restructuring continues to have a positive impact ... This [agreement with unions] will create new opportunities for Iberia to enhance its profitability further in the next two or three years.”

The signs are so positive that IAG has ordered eight A350-900s from Airbus and its board has agreed to secure a further eight A330-200 aircraft to replace 16 A340s in Iberia’s aging long-haul fleet. The A350 deal is a conversion of options that were agreed alongside IAG’s order for 18 new A350s for British Airways in April last year. The Spanish airline is set to start taking delivery of the aircraft in 2015.

While Iberia isn’t out of the woods yet, it would seem that IAG’s mission to turn the carrier around is definitely beginning to show signs of success.

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