International Airlines Group, formed from the merger of Iberia and British Airways last year, said Thursday it had approved the creation of a new budget carrier to handle short- and medium-haul flights from Madrid.
The new airline, Iberia Express, will begin operations in mid-2012 and will offer business and economy seats "at competitive fares" from Madrid's Barajas airport, the company said in a statement.
"Iberia Express will have lower operating costs than Iberia's own loss-making short- and medium-haul business. The subsidiary will recruit new staff at market rates and have improved aircraft utilisation," it said.
Iberia faces stiff competition in Spain on these routes from low-cost rivals such as Ryanair and Easyjet which have expanded rapidly in the country in recent years.
Last year Ryanair overtook the Spanish flag carrier Ias the largest airline in Spain in terms of the number of passengers carried.
Iberia Express will feed passengers onto Iberia's profitable long-haul routes, the International Airlines Group statement said.
The Iberia subsidiary will begin operations with a fleet of four Airbus A320 planes, rising to 13 planes by the end of 2012.
All the aircraft will be sourced from Iberia's existing fleet.
Iberia announced in 2009, before its merger with British Airways, that it planned to create a new airline to handle its short- and medium- haul routes and would instead focus on its more profitable long-haul flights to Latin America.
But the plan has been met from the start with stiff opposition from unions representing workers at the airline.
The union representing Iberia pilots, Sepla, swiftly called International Airlines Group's approval of the creation of Iberia Express "illegal", arguing the move does not respect the agreements signed with Iberia when the airline merger with British Airways.
"In the face of this decision by International Airlines Group, the pilots assure that they will adopt the appropriate legal measure," it added in a statement.
"Once again the management of the airline has opted for confrontation with its workers, and specifically with its pilots."
by Alain Jean-Robert
(c) 2011 AFP
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