November 29, 2012 / 2:11 PM / 5 years ago

Iberia crews set holiday strikes over job cuts

MADRID (Reuters) - Spanish airline Iberia’s ground and cabin crews will stage a series of strikes in December, disrupting the holiday travel season to protest against massive job cuts.

The around-the-clock strikes will be held on December 14 and the five days from December 17 to December 21, union leaders said on Thursday. Company officials and analysts warned the strikes would hit the image and finances of the loss-making airline.

Iberia is, with British Airways, part of International Airlines Group IAG.L (ICAG.L), which said earlier this month it would axe about 4,500 jobs, or a quarter of Iberia’s workforce, and cut capacity in a bid to make it more competitive.

Iberia has been a drag on IAG as it battles Spain’s economic crisis and labour disputes as well as tough competition from low-cost carriers and the country’s high-speed trains.

Unions said the strikes would affect other airlines because Iberia workers handle baggage at many of Spain’s airports.

Tourism represents 11 percent of Spain’s economy and Iberia’s plans have divided the government over how much to intervene in the airline sector to protect jobs and key routes.

“Spain cannot allow itself a strike in a strategic sector,” Public Works Minister Ana Pastor said on Tuesday. She said Iberia operates important short- and mid-range flights as well as strategic link-ups to Latin America. Iberia is Europe’s biggest carrier to Latin America.

Spain is in a deep recession and unemployment is painfully high at 25 percent. Every week brings news of more lay-offs. On Wednesday the European Commission approved restructuring plans at nationalised Spanish banks that will lead to thousands of job losses.

Protests against job cuts and pay delays are becoming routine. This week hospital workers in the Madrid region, which includes the capital, walked out over plans to close or privatise some state clinics. Garbage collectors in the southern city of Jerez de la Frontera recently ended a work stoppage that lasted weeks. Teachers have also been holding demonstrations.

SURVIVAL AT STAKE

IAG, formed last year by the merger of British Airways and Iberia, posted a 96 percent fall in operating profit in the January-September period, pulled lower by losses at Iberia.

Iberia Chief Executive Rafael Sanchez-Lozano warned a strike would cause insurmountable damage to the airline.

“The strike at Iberia is like a hunger strike: If you’re successful, you’ll die,” he was quoted as saying on Thursday in El Economista newspaper.

Sanchez-Lozano said airlines are heading towards low-cost models and the sector needed to be as profitable as Irish budget carrier Ryanair (RYA.I), which has rivalled Iberia on its European routes from Madrid and Barcelona.

    Yet in a fresh blow to Spain’s travel sector, Ryanair is reducing its Spanish flights due to a hike in the country’s airport taxes. The Dublin-based airline estimates its reduced Spanish capacity will affect 648 weekly flights in and out of Spain and 4,500 jobs related to the sector.

    In a research note on IAG, analyst Francisco Rodriguez of Sabadell said he assumed there was ample room for negotiations between workers and Iberia and expected job cuts will be about 3,000 rather than the 4,500 announced.

    Iberia has 21,000 employees. The job cuts involve Iberia shutting down some maintenance and handling operations.

    “In the short term the worst effect will be the strikes and their impact in media and in results,” Rodriguez wrote.

    The strikes will be held by workers in aircraft maintenance, baggage handling and cabin crew in Spain’s two largest unions UGT and CCOO. Members of the Sepla pilots union are restricted from the strike action because of an ongoing arbitration process over the creation of low-cost carrier Iberia Express.

    “A cabin crew strike alone ought to be enough to halt operations though,” said Espirito Santo analyst Gerald Khoo, adding that IAG had indicated deeper cuts than those proposed would be imposed if there was industrial action.

    Iberia launched Iberia Express this year, but the labour conflict with pilots has made it unclear whether the business will get off the ground. IAG announced earlier this month it would buy what it did not already own of Vueling VULG.MC, a Barcelona-based low-cost carrier. (Additional reporting by Rhys Jones in London; Editing by Fiona Ortiz and Mark Potter)

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