- By Region
Spain’s flag carrier Iberia, which joined with British Airways last year to form International Airlines Group, will challenge an arbitration ruling that was supposed to resolve a bitter dispute with its 1,400 pilots, according to Antonio Vázquez, IAG chairman.
He told the group’s annual general meeting in Madrid on Thursday that Iberia would launch a challenge to the ruling on Friday because the arbitrator had exceeded his mandate “in taking a decision that will negatively affect the ability of managers to achieve an appropriate cost base for the business”.
Jaime Montalvo, the arbitrator, ruled last month that Iberia was perfectly entitled to launch its low-cost airline Iberia Express but would have to include all pilots in the same overall pay scale even if working conditions in the two parts of the company were different.
Justo Peral Cabrera, chairman of the pilots’ union Sepla, took the floor at the annual meeting as a representative of pilots holding IAG shares, to accuse some of the airline group’s managers of waging “a war against the pilots”.
He said that pilots had supported the merger and were now disappointed by management’s confrontational attitude. “We were promised a project of consolidation and growth, of professional development and new opportunities,” he said. “The pilots in the end are the ones who co-ordinate the product.”
Mr Vázquez replied: “I don’t have the feeling that there is a war … We are in a macroeconomic situation that is seriously squeezing us.” He called for a reduction of unit costs and improved productivity.
Iberia has been hit by Spain’s recession during the eurozone sovereign debt crisis and the company’s revenues were further dented by regular pilots’ strikes in recent months until the arbitration ruling. In the first quarter of this year – typically a weak season for airlines – BA reported an operating loss of £62m, while Iberia lost €170m.
EasyJet, a big rival to Iberia in Spain, announced this week that it would cut its Spain flights by 7 per cent and stop basing aircraft and employees in Madrid later this year because of poor returns.
Willie Walsh, IAG chief executive, did not hide his frustration with the Spanish side of the business, telling the meeting that the Iberia pilots’ actions were “selfish” because they prevented the creation of new jobs and undermined existing ones.
“Our duty is to bring Iberia back into profitability,” he said. “The basic fact is their current cost structure is not competitive and will require deep and permanent structural change to make it a viable business.”
Other shareholders had a range of complaints, including the lack of dividends, and expressed fears that Iberia would lose its “Spanishness” in a British-dominated company. One asked whether future meetings would be held in English in Gibraltar.