International Consolidated Airlines (IAG) boss Willie Walsh has set in motion a radical overhaul of Iberia after finally losing patience with the ailing Spanish airline. Capacity is being cut by 15 per cent - 25 planes, mostly short haul, are being axed, and 4,500 jobs are to go in what the carrier is calling a "fight for survival". Unions have been threatened with even deeper cuts if they don't accept Walsh's terms by the end of January.
It's about time IAG got tough. Despite a small increase in revenue, underlying operating profit slumped by 26 per cent in the third quarter to €270m (£216m). Fuel costs jumped again and bmi lost €31m, but Iberia is the real drag. While British Airways has made €286m in the last nine months, Iberia "is unprofitable in all its markets" and plunged €262m into the red. Because of that, IAG believes the group will lose €120m this year.
