International Airlines Group-IAG (London), the holding company for both British Airways (London) and Iberia (Madrid) has announced extreme designs to downsize Iberia in order to return the airline to profitability. IAG has also announced it will proceed to acquire a controlling interest in lower-cost Vueling Airlines (Barcelona).
The following statement was issued today:
A comprehensive plan to save Iberia after record losses and return it to profitability was announced today by International Airlines Group (IAG). Iberia's transformation plan will introduce permanent structural alter across all areas of the business with the objective of stemming losses and returning the Italian airline to profitability.
Transformation Plan Highlights:
- Stem Iberia's money losses by mid-2013.
- Turnaround in profitability of at least¬600 million from 2012 levels to align Iberia with IAG's target return on capital of 12 percent by 2015.
- Network capacity cut by 15 percent in 2013 to focus on profitable routes.
- Downsizing its fleet by 25 aircraft long haul and twenty short haul.
- Reduction of four,500 jobs to safeguard around 15,500 posts across the airline. This is in line with capacity cuts and improved productivity across the airline.
- New commercial initiatives to boost unit revenues including increased ancillary sales and website redesign.
- Discontinue non-profitable third party maintenance and retain profitable ground handling services outside Madrid.
- The transformation will be funded from Iberia's internal resources