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Losing Short and medium haul flight market share to low cost airlines may have caused Iberian to launch their new 'Iberia Express' brand, however the next problem that the company must address is the escaliting costs of flying long haul to South America, due to increasing oil prices.
Part of the problem is that Iberia operates the routes with the Airbus A340, which has 4 Engines, and it will be almost 2 years until their new Airbus A330, with 2 Engines, is brought into operation.
The airline currently operates 36 Airbus A340, with a maximum capacity of 222,000 liters of kerosene. The Airbus A330 uses around 15% less fuel, with a maximum capacity of 139,100 liters. The bulk of the arrival of two motored appliance manufacturer in Europe for the long distance will be between 2013 and 2014.
Iberia will therefore have to continue flights to South America and other long-haul destinations using their Airbus A340, which will have an impact on both costs and ticket prices due both to the rising costs of fuel, and the models heavy use of it.
South America represents the biggest volume of long-haul flights for Iberia, the Spanish airline which has a market share close to 24 percent on flights between Europe and Latin America, thanks to its 19 direct connections, in some cases more than one frequency a day.
In 2008 Iberia posted losses of 79.2 million euros, while in 2009 the figure rose to a 474 million profit. In 2010 the airline returned to minus figures - with a loss of 26 Million. However, for the first half of 2011 the losses had risen to 78 million euros.