Skift Take

Iberia's struggles need to be seen within the context of Spain's challenges rather than the lens of its London owners.

British Airways parent IAG said the head of unprofitable Spanish unit Iberia will step down with immediate effect, mid-way through a cost-cutting program that’s provoked union ire as it seeks to eliminate 3,140 jobs.

Rafael Sanchez-Lozano will leave by “mutual agreement,” London-based IAG said today. He’ll be replaced by Luis Gallego, who heads the Iberia Express discount unit and is a former chief operating officer of low-cost affiliate Vueling Airlines SA.

“The conflict with unions could have weighed on Sanchez- Lozano’s decision,” said Francisco Salvador, a Madrid-based strategist at FGA/MG Valores. “Iberia needs a big restructuring to adjust to a more competitive market environment, and Gallego brings his expertise from Iberia Express and Vueling.”

Iberia Express, established last year with less-generous employee contracts, is running at a profit, while the main Iberia operation posted a 351 million-euro ($450 million) annual loss. IAG is seeking a 600 million-euro earnings turnaround at the Madrid-based business by 2015.

“Iberia is entering its next transition phase and I have every confidence that Luis can return Iberia to profitable growth,” IAG CEO Willie Walsh said in the statement, adding that Sanchez-Lozano had led Iberia “through a very difficult period.”

Sanchez-Lozano, who has a degree in law and business, was appointed Iberia CEO on July 9, 2009 — 18 months before the merger with BA that formed IAG — the same day as chairman Antonio Vazquez, who subsequently became group chair. Gallego, who studied engineering, also takes his place on the IAG board.

Manuel Atienza, a spokesman for the UGT union, said the departure of Sanchez-Lozano had been “coming for a while” and that his management was “terrible, leaving the company in critical situation.” Atienza welcomed Gallego as “an open-minded guy,” while cautioning that he should avoid bringing an Iberia Express culture perceived to be anti-union to the main airline.

Shares of IAG, as International Consolidated Airlines Group SA is known, traded 1.4 percent lower at 252.30 pence as of 10:32 a.m. in London. The stock has gained 37 percent this year.

Editor: Chris Jasper. To contact the reporters on this story: Robert Wall in London at [email protected]; Manuel Baigorri in Madrid at [email protected]. To contact the editor responsible for this story: Benedikt Kammel at [email protected]


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Tags: british airways, iag, iberia, labor

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