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Last updated: March 11, 2013 5:24 pm
International Airlines Group moved a big step closer to resolving strikes at Iberia after Spanish unions indicated they would back a mediator’s proposal to temper job losses at the lossmaking airline.
The main unions representing Iberia ground staff said on Monday that they had agreed in principle to accept proposals put forward by a Spanish government-appointed mediator to end the strikes, and were confident they would be passed at a union meeting on Tuesday. A final meeting between unions and the mediator, Gregorio Tudela, a professor at Madrid’s Autonomous University, takes place on Wednesday.
The proposal, accepted by the board of Iberia, which makes up IAG alongside British Airways, recommends that the number of job losses in its planned restructuring should fall from a planned 3,807, or just under a fifth of its workforce, to 3,141. The compromise would also offer a higher level of redundancy payment to fired workers.
Spanish unions have held two five-day strikes, at a cost of €3m a day according to the company, after talks between the carrier and labour representatives over the carrier’s restructuring plans broke down at the start of the year. Unions were planning a third round of five days of strikes for later this month.
However, Sepla, Spain’s powerful pilots union, said that while it was considering the proposals, it would not do so without a clear commitment from the company to guarantee further cuts would not be made in the future.
“There needs to be a plan for the future, and to restore the flights and jobs that Iberia has lost,” said Ana Serrano, spokeswoman for Sepla. “If not, there is not much sense agreeing with them. A decision will be made this week or the next.”
Last month IAG reported a near €1bn pre-tax loss for 2012 after taking a €343m impairment charge on Iberia, with the Spanish carrier’s operating loss widening from €61m in 2011 to €896m.
Analysts said that while the proposed cuts would not alone achieve the €600m improvement in Iberia’s operating profits IAG is targeting, investors would welcome the relatively soft response from the mediator.
“At face value then, the proposed restructuring is not as aggressive as IAG wanted,” said Deutsche Bank analysts. “But nevertheless we think the market will focus on the speed at which this restructuring is moving and this is positive.”
Andrew Lobbenberg at HSBC estimated Mr Tudela’s proposals would help IAG achieve about half the targeted improvement, while other parts of the restructuring, such as modernising the fleet and improving the Iberia brand, would help achieve the rest.
He added that a significant positive for IAG was that the proposal did not restrict how the company might develop Iberia Express – the low-cost airline it is seeking to launch – or Vueling, the budget carrier it bid for late last year.
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