International Airlines Group, owner of British Airways, said it plans to cut 4,500 jobs at Iberia to ensure the survival of its Spanish subsidiary and boost the merged carrier’s profitability.
The cuts, amounting to a fifth of Iberia’s 21,000-strong payroll, could be even deeper if there is no agreement with labor unions by the end of January, IAG warned.
“Iberia is in a fight for survival, and we will transform it to reduce its cost base so it can grow profitably in the future,” IAG's chief executive said as the carrier announced its third quarter results.
Operating profit before exceptional items fell to 270 million euros ($343 million) in the three months through end-September from $461million a year ago.
Revenue grew 12.6 percent to $6.4 billion, with passenger sales up 14.1 percent at $5.53 billion, while cargo revenue grew 3.5 percent to $378 million.
IAG, formed by the Anglo-Spanish merger in 2011, made a pretax loss of $215 million in the first nine months compared with a year-earlier profit of $451 million. BA’s operating profit of $363 million in the period was mostly offset by Iberia’s $333 million loss.
Cargo revenue grew 0.9 percent in the first nine months to $1.13 billion as steady monthly increases at BA were eroded by double-digit declines at its Spanish partner.
In addition to the job cuts, IAG plans to shrink Iberia’s network capacity by 15 percent in 2013 and slim its fleet by 25 aircraft.