Iberia accelerates and brakes at the same time and expect to make a profit this year, something they have not done since 2009
In 2012, Iberia lost a million euros per day, and in 2013 they lost half a million Euro per day. The goal for this year is to not lose any money at all. Luis Gallego, president of Iberia since 1 January this year, said that this year brings profit. He realizes, however, that there are several unresolved issues, including the useless “air bridge” between Madrid and Barcelona.
The launching of the high-speed train AVE has hit domestic flights for all airlines. On some routes, such as between Madrid – Malaga and Madrid – Valencia the train has taken very large shares of the traffic. It has also happened between Madrid and Barcelona, but there are enough business flights to keep air route open. In June, which is the last month there are statistics for, the AVE train between Madrid and Barcelona had a market share of 62.3%
To gain profitability, Iberia has made major staff reductions since 2013, and are now proceeding with a plan for voluntary retirement of an additional 1,400 employees. Before the restructuring, the company had 20,500 people on the payroll, but when the restructuring is completed it is expected to remain between 15.500 and 16.000 employees. The relationship between employees and number of aircraft are still too high, but it is expected to be more normal when the newly ordered aircrafts are in operation. There are currently 16 new aircrafts on order for delivery between 2015 and 2020.
Now certain reductions are being done for certain unprofitable domestic routes but also some international routes will be closed. However they are increasing capacity on certain routes especially to Latin America. They will also open new routes to South America, this month is the new connections to Santo Domingo and Uruguay.
Iberia has now had an increase in air traffic in two consecutive months, in August, the increase was 4%, it gives a positive growth of 0.6% during the first eight months of this year compared with the same period in 2013. The group as a whole, which also Vueling and British Airways, has until August had an increase in demand of 17.6%.