* Iberia insists cuts are needed for survival
* Unions have until Jan 31. to back restructuring plan
* Unions want growth plan to ensure Iberia survives
* Talks to start on Thursday -union source
By Tracy Rucinski
MADRID, Jan 2 Spanish airline Iberia said on
Wednesday it has reached a preliminary agreement with pilots
over plans to restructure the loss-making airline by laying off
staff and cutting salaries.
However, the agreement to sit down to talks does not
necessarily mean that the union will support the restructuring.
The airline's unions, which have been demanding a growth plan
from Iberia, have until Jan. 31 to support the airline's plans.
"We reached the same agreement with the pilots as we did
with the other unions two weeks ago, which is a preliminary
agreement for talks," a spokesman for the company said.
A union source said the pilots signed the agreement to kick
off negotiations and that talks over the nature of job cuts
would begin on Thursday.
Iberia averted strike action over the Christmas holidays
through talks with its ground and cabin crews over the shape of
the restructuring, but until now the pilots had been less
willing to sit at the negotiating table.
Iberia, part of the International Airlines Group (IAG)
along with British Airways, plans to axe about 4,500
jobs - a quarter of the Spanish carrier's workforce - and cut
salaries to become more competitive.
Iberia says the cuts are needed to guarantee its survival
amid low-cost competition and Spain's deep economic recession,
both of which have weighed on the airline and made it a drag on
its more profitable partner, British Airways.
To back the restructuring plan, unions want proof that there
is a growth strategy for the airline beyond the cost cuts.
"We're not very optimistic going into the talks because
there still isn't anything on the table showing how this plan
saves Iberia, showing how Iberia will grow in the future," the
union source, who did not wish to be named, said earlier on
The Spanish government, which technically holds 12.1 percent
of IAG through a stake owned by nationalised lender Bankia
, has also expressed concern over the job cuts as Spain
battles record-high unemployment of 25 percent.
Spain's joblessness continues to grow amid thousands of job
losses at nationalised banks and other struggling companies.
The planned cuts at Iberia, one of Spain's largest firms,
are also in the strategic tourist sector, one of the country's
few growth drivers and representing around 11 percent of an
economy in its second recession since 2009.
As part of its restructuring, Iberia has shut down flights
to destinations such as Athens, Cairo, Istanbul, Montevideo and
At the root of union discontent has been Iberia's creation
last March of low-cost carrier Iberia Express, meant to compete
with budget rivals like Ryanair Holdings Plc and EasyJet
Plc by having a lower and more flexible cost structure.
The pilots' union, Sepla, spent most of 2012 in conflict
with Iberia over the new airline, but an independent arbitrator
ruled last week that new pilots for Iberia Express can be hired
with 40 percent lower salaries than at parent Iberia.
The ruling also limits the amount of short- and medium-haul
capacity Iberia can transfer to the new airline but links wage
hikes to Iberia's performance.
Iberia posted a 262 million-euro ($345.4 million) operating
loss in the nine months to September, while BA recorded a
nine-month operating profit of 286 million euros. Sepla has
accused IAG of downsizing Iberia to the benefit of BA.
Another source of union tension has been IAG's 113
million-euro bid to buy out the rest of low-cost airline Vueling
, Spain's second-largest carrier by passenger numbers
and in which IAG already holds 46 percent.
IAG announced the bid the day before it unveiled Iberia's
Experts have highlighted Vueling, which has a large business
clientele, as one of the few Spanish companies that is creating
jobs and boosting economic growth thanks to strict cost