International Airlines Group (IAG), the holding company for the merger of British Airways and Iberia, said on Wednesday that IAG and Rafael Sánchez-Lozano had decided by “mutual agreement” that he will step down as chief executive of the loss-making Spanish carrier with “immediate effect.”
Sánchez-Lozano is also leaving IAB’s management board. He will be replaced by Luis Gallego, who is currently chief executive of Iberia’s low-cost subsidiary Iberia Express. Gallego also joins the Iberia and IAG boards.
The 56-year-old Sánchez-Lozano has been chief executive of Iberia since July 2009 and was involved in the merger with BA, which was sealed at the start of 2011.
The management shift coincides with the implementation of a restructuring plan under which 3,141 employees of Iberia, about 16 percent of its workforce, will be laid off. Cabin-crew and ground handling staff held a series of stoppages to protest the plan before reaching agreement with management, which initially proposed 4,500 job cuts. Iberia’s route capacity is also being reduced by 15 percent this year, while employees will see their wages cut by between 7 and 15 percent.
IAG says the transformation is necessary to overhaul the airline and return it to profitability. Iberia's losses last year widened to 351 million euros from 98 million a year earlier, a result that helped drive IAG into the red.
“I would like to thank Rafael for his hard work and commitment to Iberia. He has led the airline through a very difficult period in the midst of a deep recession and has completed the first important step toward returning the airline to profitability,” said Willie Walsh, the chief executive of IAG.
Walsh highlighted Sánchez-Lozano’s successor’s “extensive experience across a range of international airlines.”
Under IAG’s bylaws, Sánchez-Lozano will be entitled to compensation of around two million euros. This includes 12 months´ salary, which in the case of Sánchez-Lozano came to 818,000 euros. He is the only Iberia director entitled to a golden parachute, which amounts to 1.168 million euros.