HispanicBusiness

Iberia is to cut 4,500 jobs over the next three years as part of a restructuring plan by Spain's biggest airline following its merger with British Airways, joint owner International Airlines Group (IAG) said Friday.

The proposed cuts amount to a reduction of nearly 25 per cent of Iberia's current workforce. The airline will also dispose of a quarter of its fleet and reduce its network capacity by 15 per cent, said IAG.

IAG said the restructuring is aimed at safeguarding 15,500 posts at the Spanish airline.

Iberia made record losses of 262 million euros (340 billion dollars) from January to September. The airline lost money in all its markets, Iberia managing director Rafael Sanchez-Lozano said.

"Iberia is in a fight for survival," he said. "It is unprofitable in all its markets. Unless we take radical action to introduce permanent structural change, the future for the airline is bleak."

IAG as a group made losses of 39 million euros in the first nine months of this year, after making a profit of 338 million euros in the corresponding period of 2011.

The losses were partly due to the weakness of Iberia, IAG told the Spanish stock market watchdog CNMV.

"The group performance is coming back to the levels seen in 2011," said Willie Walsh, IAG's chief executive. "However, there remains a strong difference between the performances of British Airways and Iberia."

The parent company said it now expected to make an overall operating loss of 120 million euros for the year - excluding any costs associated with the Iberia restructuring.

The restructuring plan comes a day after IAG announced that it would pay 113 million euros to buy up the remaining 54-per-cent stake

in Spanish budget airline Vueling that it does not already own.

Walsh said the acquisition of Vueling would be "good for Spain and create new Spanish jobs."

On Wednesday, IAG released its latest passenger figures for October, which showed that traffic rose by 6.2 per cent at British Airways from a year earlier, while at Iberia traffic was down 3.7 per cent.

Iberia has now adopted a rescue plan involving permanent structural changes in all its business areas.

If the airline does not reach an agreement with trade unions by January 31, it will have to cut even more staff, Sanchez-Lozano warned.

Iberia's plans include focusing on lucrative trans-Atlantic routes and reducing handling services.

Iberia has been affected by Spain's deep economic crisis, but the carrier had already been suffering from structural problems earlier on, Sanchez-Lozano said.