The International Airlines Group (IAG) has announced drastic plans to turn around its Spanish operations, with the tabling of a 100% bid for low-cost carrier Vueling and plans to slash 4,500 jobs from Iberia.
The Anglo-Spanish airline group, which also includes British Airways, announced on Friday that it plans to buy 100% of Barcelona-based Vueling through its new wholly-owned subsidiary, Veloz Holdco SLU. IAG already owns 45.85% of Vueling’s shares through Iberia, so essentially it is bidding for the remaining 54.15% in an offer worth EUR113 million (US$144m).
“This acquisition would be positive for Spain. We would retain Vueling’s Barcelona base and create new Spanish jobs,” said IAG’s chief executive, Willie Walsh.
Unfortunately Spanish jobs will be cut elsewhere. In an effort to stem losses at Iberia, IAG has embarked on a turnaround plan which will see the airline cut 4,500 jobs. The downsizing exercise will see Iberia’s network cut 15% in 2013 and its fleet reduced by 25 aircraft – five long-haul and 20 short-haul – as the airline pulls out of loss-making routes.
“Iberia is in fight for survival. It is unprofitable in all its markets. We have to take tough decisions now to save the company and return it to profitability. Unless we take radical action to introduce permanent structural change the future for the airline is bleak. However this plan gives us a platform to turn the business around and grow,” said Rafael Sánchez-Lozano, Iberia’s chief executive.
Walsh added that IAG “will not hesitate to take the necessary steps to protect the interests of our shareholders”.