Reuters - Video

Edition: US | UK | IN | CN | JP

Finance Videos

Iberia's costly crisis causes chaos

Friday, March 08, 2013 - 02:35

March 8 - Iberia staff have staged a series of strikes and protests throughout the week against a restructuring plan that will axe 3,807 jobs. Over 1000 thousand flights have been cancelled. How much damage has it caused the airline and it there any hope of turning Spain's flagship carrier around? Joel Flynn reports.

▲ Hide Transcript

View Transcript

It's been a tough week for Iberia. Thousands of pilots, flight attendants and ground staff have been on strike over pay cuts and job losses at the Spanish flag carrier. Unions have called three long stoppages - this was just the second. It forced the airline to cancel 1,300 flights. That says this worker is the fault of Iberia's parent company International Airlines Group - and in particular its boss. SOUNDBITE: Iberia Worker, Antonio Jesus Huertas, saying (Spanish): "The root of the problem is the man who decided to turn this company into a low cost airline. As an executive of British Airways, Mr. Willie Walsh, is keeping his company rising. Iberia doesn't matter in this merger - it seems to me the aim is let it vanish little by little." The Spanish flag carrier sealed its $8 billion merger with British Airways in 2010. But since then it's fought a losing battle against low-cost airlines and high-speed trains. That's not to mention Spain's deep recession, where one in four workers is without a job. John Strickland is an airline consultant. SOUNDBITE: JLS Consulting Director, John Strickland, saying: "Iberia's one of the last remaining legacy carriers in Europe, it hasn't been through any restrucutirng, it faces intense competition, particularly from low cost carriers, and that's where it's losing most of its money. It's short-haul operations are heavily loss-making, it needs to keep them to feed its long-haul flights, but it has to make sure it can compete on a level-footing with those other far more dynamic and efficient carriers." Iberia's troubles follow turbulance at a string of other flaship carriers in Europe. Hungary's Malev went out of business last January, while Poland's national airline Lot is currently reshaping its jobs and its routes. British Airways - here in the UK - has also been through a painful restructure. The strikes are the biggest in Iberia's history and Walsh says they're costing IAG 3 million euros a day. The unions have reportedly said they will accept job losses - if the company increases its pay off fund by 160 million euros. But IAG - which posted a 613 million euro operating loss last year - is not budging. SOUNDBITE: JLS Consulting Director, John Strickland, saying: "The worst case scenario, if the management doesn't succeed in implementing the restructuring that it's asking the unions to cooperate with, is the company would shrink. Willie Walsh is a chief executive hard-bitten in experience he knows if an airline is losing money, you have no choice but to cut those losses by reducing activity, and that's something he's already indicated he's prepared to do." There's no sign yet of any breakthrough, and unions are threatening to take the next strike through to the lucrative Easter week.

Press CTRL+C (Windows), CMD+C (Mac), or long-press the URL below on your mobile device to copy the code

Iberia's costly crisis causes chaos

Friday, March 08, 2013 - 02:35