It seems IAG’s patience with Iberia is running out quickly, as it announced today a sharpening of the job axe.

Up to 4500 positions are up for the cut, along with five long haul aircraft and 20 shorthaual aircraft to be removed for the Iberia mainline fleet (156 planes down to 131 planes).

This will also reduce Iberia’s routes by 15%, to focus on the profitable routes.

IAG revealed a 30% drop in pre-tax profits due to Iberia’s poor performance, as well as the purchase of British Midland Airways (better known as BMI), and that olde bugbearer of airlines – fuel.

Willie Walsh, CEO of IAG says:

“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,”

“However, there remains a strong difference between the performances of British Airways and Iberia.”

IAG flagged that Iberia’s future wasn’t rosey in the last quarter report – and that jobs would be on the line. That promise has now been delivered sadly.

Rafael Sanchez-Lozano, Iberia’s CEO puts it bluntly.

“Iberia is in a fight for survival,”

“It is unprofitable in all its markets.

“Unless we take radical action to introduce permanent structural change, the future for the airline is bleak.”

Ouch.

As well as the 4500 jobs to go, there will also be what IAG describes as “permanent salary adjustments to achieve a competitive and flexible cost base”.

Or pay-cuts and cuts in conditions to you and me.

Iberia has gone out to the Unions (who were expecting 7000 jobs to go to the axe), but has set itself a deadline of 31st January 2013 to have all deals agreed.

With Iberia burning through €1.7 Million a day, there is motivation to sort something out, with the ominous threat of if no agreement is reached, deeper cuts will have to be made.

This comes at a time where IAG itself is going to make a 100% control bid of Vueling, purchasing the remaining stake of Vueling for €113 million.

IAG believes with Vuelings lower cost base, it can create more jobs and operate more lower cost services.

How it will convince the regulators is another matter completely.

Sadly, this is an indication of the weakeess of the Euro-area. Everyone is trying to drive down costs – at all costs it seems.

Posted by Kevin M GhettoIFE | Comments are off for this article

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