Iberia to cut 4,500 jobs (around 22%) under IAG restructuring plan
IAG has announced 4,500 job cuts (out of a total staff of around 20,000) at Iberia as part of a widely anticipated restructuring, to stem its cash losses. Iberia is cutting its 156-strong fleet by 25 aircraft, and reducing 15% of its network capacity, focusing on the most profitable routes.It hopes to stem its cash loss by mid-2013. IAG also revealed a 30% drop in pre-tax quarterly profits to €221m – due to losses at Iberia and also at recently purchased BMI. IAG now expects to make an overall operating loss of €120m this year – excluding any costs associated with the Iberia restructuring – with further losses likely in the remaining 3 months due to the impact of storm Sandy. Iberia has been suffering record losses, and IAG warned 3 months ago that job cuts were likely to come, and it is “unprofitable in all its markets.” “Unless we take radical action to introduce permanent structural change, the future for the airline is bleak.” The 4,500 job losses are not as high as the 7,000 figure that reportedly had been expected by Iberia’s unions. IAG also plans to buy Spanish budget airline, Vueling,
In March 2007 Iberia had 24,348 employees. It had 20,671 staff in November 2010. : They had at least 20,000 staff in January 2012.
Iberia to cut 4,500 jobs under IAG restructuring plan
British Airways-owner IAG has announced 4,500 job cuts at Iberia as part of a widely anticipated restructuring of the Spanish carrier.
Iberia is cutting its 156-strong fleet by 25 aircraft, and reducing 15% of its network capacity, with the airline focusing on the most profitable routes.
The plan aims to stem Iberia’s cash losses by mid-2013, and raise profits by at least 600m euros ($766m; £479m).
IAG also revealed a 30% drop in pre-tax quarterly profits to 221m euros.
The drop was due to the poor performance at Iberia and at the recently-purchased UK regional airline BMI, as well as rising fuel, operating and engineering costs.
“The group performance is coming back to the levels seen in 2011 and this is particularly true if you strip out the BMI losses of 31m euros in the quarter,” said IAG chief executive Willie Walsh.
“However, there remains a strong difference between the performances of British Airways and Iberia.”
The parent company said it now expected to make an overall operating loss of 120m euros for the year – excluding any costs associated with the Iberia restructuring – with further losses likely in the remaining three months due to the impact of storm Sandy in the US.
Its pre-tax losses for the first nine months of the year have now reached 169m euros, compared with a 355m-euro profit in the same period last year.
Iberia has been suffering record losses, and IAG flagged up three months ago that job cuts were likely to come.
“Iberia is in a fight for survival,” said the Spanish subsidiary’s chief executive, Rafael Sanchez-Lozano. “It is unprofitable in all its markets.
“Unless we take radical action to introduce permanent structural change, the future for the airline is bleak.”
The 4,500 job losses are not as steep as the 7,000 figure that reportedly had been expected by the airline’s unions.
IAG said the restructuring would safeguard 15,500 posts at the airline.
However, the restructuring plan also includes “permanent salary adjustments to achieve a competitive and flexible cost base”.
The airline has set a deadline of 31 January next year to reach agreement with unions over the cuts.
“Time is not on our side,” said Mr Sanchez-Lozano, claiming that: “The company is burning 1.7m euros every day.
“If we do not reach consensus, we will have to take more radical action, which will lead to greater reductions in capacity and jobs.”
The restructuring plan comes a day after IAG announced that it would pay 113m euros to buy up the remaining 54% stake in Spanish budget airline Vueling that it did not already own.
Mr Walsh had said that the acquisition of Vueling would be “good for Spain” and “create new Spanish jobs”.
On Wednesday, IAG released its latest passenger figures for October, which showed that traffic rose by 6.2% at British Airways from a year earlier, while at Iberia traffic was down 3.7%.
The airline’s woes in part stem from the weakness of the eurozone economy, including a sharp downturn in its Spanish home market. However, according to Mr Sanchez-Lozano, the airline’s problems are also “systemic and pre-date the country’s problems”.
8 November 2012 (BBC)
BA and Iberia owner IAG makes Vueling takeover offer
The owner of British Airways and Iberia, IAG, has made a takeover offer for Spanish budget airline Vueling.
IAG has offered €113m ($144m; £90m) for the 54% stake in Vueling that it does not already own.
IAG’s Iberia already holds a 46% stake in Vueling, and if the bid is accepted it expects the deal to be completed in the second quarter of 2013.
IAG chief executive Willie Walsh said the acquisition would be “good for Spain” and “create new Spanish jobs”.
IAG maintains the takeover – which values Vueling at about 209m euros – will not need regulatory approval by the European Commission.
For the nine months to 30 September, Vueling made pre-tax profits of 59m euros and had total assets of 805m euros, IAG said.
On Wednesday, IAG released its latest passenger figures for October, which showed traffic up 3.2% from a year earlier with the load factor – a measure of how full planes are – up to 80.5%.
However, the increase was down to an improvement at British Airways, where traffic rose by 6.2%. At Iberia, traffic was down 3.7%.
IAG is due to release its third-quarter results on Friday, and reports suggest it will also announce restructuring plans for Iberia.
On Wednesday, the Reuters news agency – citing union sources – reported that up to 7,000 jobs could be cut at the Spanish carrier. IAG declined to comment on the report.
When IAG reported half-year results in August, operating losses at Iberia had widened to 263m euros for the six-month period.
IAG said at the time that Iberia’s problems were “deep and structural” and that it would “not be able to avoid job losses” as part of the airline’s restructuring.
BA and Iberia parent group reports losses
The parent group of British Airways and Iberia has reported a 390m euro ($476m; £306m) loss for the six months to the end of June and warned it: “will not be able to avoid job losses”.
That compares with a 39m euro pre-tax profit in the same period last year.
Spanish carrier Iberia was worst hit. Itsoperating losses widened to 263m euros in the period.
International Airlines Group said it would finalise a restructuring plan for Iberia by the end of September.
Revenue rose 10% to 8.5bn euros compared with 7.8bn euros in the same period last year.
Passenger numbers rose and IAG made more money for each passenger.
But that increased revenue was more than offset by the 25% rise in fuel costs and charges from the process of restructuring its business.
Despite those higher fuel charges, UK airline British Airways turned a small operating profit of 13m euros at the start of the year.
The group’s main problems reside with its Spanish carrier Iberia.
In a statement, chief executive Willie Walsh warned: “Iberia’s problems are deep and structural and the economic environment reinforces the need for permanent structural change. We are currently working on a restructuring plan for Iberia which we anticipate will be finalised by the end of September.”
“Inevitably, we will not be able to avoid job losses as part of this process,” he added.
As well as the cost of future redundancy payouts Iberia faces particular problems due to the worsening economic conditions in its home market of Spain.
Originally, IAG had forecast it would break even this year.
“However, in the light of the Spanish macro headwind, we now expect to make a small operating loss in 2012,” said Mr Walsh.
IAG shares ended Friday 5.2% lower at 151p.