BUSINESS

Iberia reaches “landmark” productivity accord with pilots

Salaries will be frozen through to 2015 and thereafter linked to profits

One of Iberia's new Airbus A330 at Madrid Barajas airport.
One of Iberia's new Airbus A330 at Madrid Barajas airport.EFE

Iberia’s management has reached a “landmark” productivity agreement with the carrier’s pilots union, Sepla, which puts an end to a conflict raised by the airline’s decision to set up a low-cost unit that led to a series of strikes in the spring of 2012 and the cancelation of hundreds of flights.

The accord will pave the way to develop the budget carrier Iberia Express, which is seen key for a group that has posted losses over the past five years. Sepla had argued that the idea behind setting up Iberia Express was to introduce low-cost wages. Iberia’s management said the work conditions finally established for pilots of the low-cost carrier undermined the company’s profitability and decided to freeze its fleet at 14 planes.

“This landmark agreement provides a strong foundation to put Iberia on the path towards sustainable profitable growth,” IAG, the holding company for the merger of Iberia and British Airways, said in a statement posted on its website. “It will also enable Iberia to become more competitive and reduce its cost base.”

The agreement in principle is subject to the approval of Sepla's general assembly.

Iberia’s management earlier this week reached an in-principle agreement with representatives of Iberia’s cabin crew that guarantees jobs through to 2015. Talks continued with labor union leaders representing ground staff.

The accord with Sepla allows pilots to fly the maximum 900 hours a year permitted by the law and freezes their wages through to 2015. Thereafter, salary increases will be linked to the airline’s profitability.

A mediation agreement last year cut pilots’ wages by 14 percent. Last year, Iberia announced a restructuring plan that entails laying off 3,141 employees, 15 percent of its workforce.

Iberia’s executive chairman, Luis Gallego, had conditioned the opening of new routes and an increase in flight frequencies to securing a pact with the company’s workers that lowered labor costs.

“This groundbreaking deal reduces the cost structure and provides the foundation for the airline to grow profitably,” Gallego said. “A strong and profitable Iberia can protect jobs in the long term and boost tourism.”

"This agreement also enables the growth of Iberia Express with a competitive cost base and provides promotion opportunities for current Iberia and Iberia Express first officers,” Gallego added. “Iberia Express will help make Iberia profitable and stronger, by providing short-haul feed, and will provide Spanish competition to low-cost carriers.”

Willie Walsh, IAG’s chief executive said: “This agreement marks the beginning of [Iberia’s] future.”

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