Restructuring Plan Includes Salary And Staff Cuts

A tentative agreement has been reached between Spain's Iberia Airline and its pilots' union on a restructuring plan that includes both staff and salary cuts, but the union says it does not necessarily support the plan as it's currently written.

A spokesperson for Iberia told Reuters said that the tentative agreement is one that allows talks to go forward between the two parties, and that the deal means those talks will be held. The union has until January 31 to give its official support to the airline's plan.

Iberia says they only way it can survive is to cut about a quarter of its workforce and reduce salaries for the remaining workers. They cite competition from low-cost carriers and Spain's deep recession as the reasons the cuts are necessary. Unions, on the other hand, want to see evidence of a growth strategy beyond just the job cuts.

Last March, Iberia created a low-cost carrier Iberia Express, which the airline said was needed to compete with airlines like Ryanair and EasyJet. An arbitrator ruled last week that Iberia Express pilots can be paid as much as 40 percent less than pilots on the main line.

In December, Iberia and unions representing ground staff and cabin crews, comprising 93% of the total staff, agreed to negotiate the terms of the company’s Transformation Plan, aimed at restoring profitability and ensuring the airline’s future. Iberia management at the time reiterated its wish to rely chiefly on early retirements to achieve about two-thirds of the staff reduction called for in the plan. It is also prepared to negotiate such formulas as payoff for voluntary resignations, and transfers of employees to different positions and/or different locations.

FMI: www.iberia.com/us