Iberia finally gets controversial low-cost airline off the ground

Iberia on Friday unveiled its new controversial low-cost airline Iberia Express, which will begin operations on Sunday with four flights offered at discount rates.

At a presentation, the chief executive officer of the new airline, Luis Gallego, said the first flight will be from Madrid to Alicante, with other flights on Sunday from the Spanish capital to Málaga, Seville and Palma de Mallorca.

Iberia’s pilots union SEPLA has held a series of one-day stoppages since December to protest the creation of Iberia Express, which it claims breaches the collective agreement it has with the company. Iberia estimates it lost 3 million euros a day as a result of the stoppages. The Public Works Ministry has appointed a mediator to help resolve the dispute.

Iberia said the creation of the budget carrier was necessary to stem losses on its short- to medium-haul flights. Iberia booked an operating loss last year of 61 million euros.

“From the first moment we were clear that in order to compete in the complex European panorama, we needed to have costs that were the average in Europe, in an environment in which the majority of companies are in the red, while others are going bust,” Gallego said.

Iberia Express will start off with four planes and four routes. It will add a further five routes in Spain in May and start to fly in the summer to overseas destinations such as Dublin, Riga, Mikonos and Naples. It will have a fleet of 13 planes by the end of the year and 40 in 2015. The company will have a workforce of 500, including 125 pilots, 325 cabin crew and 50 ground staff.

Accompanying Gallego at the presentation, Iberia Chief Executive Rafael Sánchez-Lozano said Iberia Express expects to “make money from the first day.” Iberia estimates its creation will generate cost savings for Iberia of 100 million euros by 2015. The company will have initial capital of 20 million euros.