British Airways’ sister carrier Iberia will launch a new subsidiary next summer to operate domestic and European flights in a move likely to trigger a confrontation with unions.
Chief executive Willie Walsh and the board of BA and Iberia parent International Airlines Group (IAG) approved the launch of Iberia Express yesterday. Iberia pilots have already warned they will strike.
Iberia Express will be based at Iberia’s Madrid Barajas hub and launch with four aircraft, growing to 13 by the end of 2012. IAG said it would use existing Iberia aircraft but recruit pilots and cabin crew on lower wages and different terms and conditions to those at Iberia.
In a statement IAG guaranteed the terms and conditions of existing Iberia staff. It said: “Iberia Express will have lower operating costs than Iberia’s loss-making short and medium-haul business. The subsidiary will recruit new staff at market rates and have improved aircraft utilisation.”
The move implies cuts in the existing Iberia workforce as the subsidiary grows in size and threatens to put Walsh at the centre of a second major industrial dispute in two years.
As BA chief executive, Walsh sparked an 18-month dispute with cabin crew that saw 22 days of strikes in spring 2010 and repeated ballots in favour of industrial action. In the course of the dispute, Walsh established and recruited a new team of BA cabin crew on changed terms and conditions.
The dispute was only settled when Walsh moved to IAG at the end of last year, and BA sought to draw a line under it last month with the launch of its first major brand-marketing campaign in 10 years.
Iberia Express will offer both business and economy seats. IAG said the subsidiary will provide transfer feed into Iberia’s long-haul network and “over time look to develop new markets and destinations”.