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Iberia to make cost savings on salaries

Source: Reuters - Tue 20th Nov 2012
Iberia to make cost savings on salaries

Spain's flagship airline Iberia , battling low-cost rivals, high-speed trains and deep recession at home, said on Tuesday it needed to cut labour costs by 1/3rd to become competitive.

Owner IAG (International Airlines Group) announced earlier this month it would slash 4,500 jobs at Iberia, almost 25% of its workforce.

"Our labour costs are around 1.3 billion per year and they have to come down by around 450 million," said Chief Executive Officer Rafael Sanchez Lozano.

Iberia aims to achieve operating profit of 300 million in 2015, Sanchez said, and will likely report a loss of around 300 million in 2012.

IAG, which was formed by the 2011 merger of British Airways and Iberia, said earlier this month it hoped a restructuring plan for the Spanish airline would improve profit by at least 600 million in the next 3 years.

In addition to job cuts, IAG said it would cut network capacity by 15% in 2013, focusing on profitable routes and downsizing its fleet by 25 aircraft.

Earlier this month Iberia confirmed that they will persue a takeover of Spanish budget airline, Vueling , who they already hold a 46% stake in.

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