Iberia Express : Final Decision Expected Tomorrow

 

Iberia Airline Executives met yesterday to consider three alternatives with regards to the proposal to create a new low-cost airline to offer short and medium haul flights.

This is the third attempt of Iberia's CEO, Rafael Sánchez Lozano, to bring a low-cost airline to the group.

It is expected that each option will allow for a new company to be formed to run alongside the current operation. The first and most likely option is for Iberia to own 100% of the new airline, provisionally called Iberia Express, which will in turn be owned by International Airlines Group (AIG), which was formed as a merger between Iberia and British Airways.

The two other option centre around the brand being owned and operated as a franchise.

The board of IAG are due to meet in London tomorrow to make a final decision on the subject.

All of the options propose that Iberia Express would operate a fleet of 35 aircraft with 5 years.

The biggest objection to the proposal to date has come from Employees - specifically the Pilots who are affiliated to the SEPLA union, who are concerned that the possible outsourcing of services could represent a threat to their jobs. The pilots have also spoke of their concerns that any Iberia Express aircraft should be maintained and operated in exactly the same way as other Iberia airplane, despite their 'low cost' tag.

Lawyers point out that there was a detailed clause specifically regarding the protection of employment for all employees as result of the recent merger between Iberia and British airways, however concerns are that this does not extend to the creation of a new and third company within the IAG group.The CEO of BA, Willie Walsh, has expressed his concern about Iberia's image being tainted by association with a 'low-cost' brand, and that it could leave the group exposed to costly industrial and legal action by employees. As such they have drawn up a contingency plan :

1. Any resulting employee strikes in Spain would guarantee 90% minimum services.

2. The group is not exposed to bad press or negative public opinion

3. There are to be no redundancies or job cuts as a result of the proposal.

If the option to outsource the short and medium haul flights was to be considered as an option, it would carry a surplus of 250 Pilots. However, the group consider that within 5 years this surplus would be absorbed by retirement.

Union Opinion

Justo Peral, speaking on behalf of the SEPLA Pilot's Unions commented "if Iberia choose to ignore our loyalty, and to offer short and medium term flights with a possible reduction of 50% of Pilots, IAG should know that we will act with all means at our disposal to stop this from happening. "

Antonio Escobar, President of the TCP Ground workers Union, appealed to the Directors of Iberia "to reach agreement with SEPLA so we can sart the low-cost airline, as agreed last year with the TCP and ground workers. It is best for everyone, "he said.