An agreement by pilots at Spanish airline Iberia to raise productivity as part of a turnaround programme eliminating more than 3,000 jobs, was hailed as “a bold deal” by parent group CEO Willie Walsh yesterday.
The pact, which needs to be ratified by the Sepla union’s general assembly, “provides a strong foundation to put Iberia on the path towards sustainable profitable growth,” its parent IAG said yesterday.
The accord retains a 14% cut in pilot pay while eliminating another 4% reduction that would have come without productivity agreements, IAG said.
Willie Walsh, chief executive at the group, said in October that Iberia would return to profit this year after brokering an agreement to cut more than 3,000 jobs and close unprofitable short-haul routes at the unit.
IAG, Europe’s third- largest airline, also set up Iberia Express, with less-generous employee contracts to aid the turnaround.
“This agreement marks the beginning of its future,” Mr Walsh said yesterday.
The accord brings Iberia’s costs in line with those at those of the Express arm, Luis Gallego, chairman Iberia, said in Madrid. Iberia Express will be able to add 25 aircraft by 2017.
IAG rose 0.8% to 433.10p, valuing it at about £8.8bn (€10.7bn). The stock more than doubled last year.
The deal also sets a new entry-level pilot wage, while some Iberia first officers can become captains at the Express unit, provided they accept the feeder airline’s pay scale.
Agreements with other Iberia unions, including ground handling staff, should “follow more easily,” said Oliver Sleath, of Barclays.
Mr Walsh had said investments at Iberia to modernise the carrier’s fleet, including purchasing more Airbus A330 long-haul jets and the replacement A350 model, are contingent on achieving sustainable profitability at the Spanish arm. A turnaround of Iberia is a key part of Walsh’s plan to lift the group’s operating profit to €1.8bn in 2015.