Iberia announces new measures to reduce costs and raise productivity

Iberia announces new measures to reduce costs and raise productivity

Iberia today announced plans to implement a series of measures aimed at making the airline more competitive and strengthening its position in a period marked by weak demand, high fuel prices, and fierce competition. This position has been aggravated seriously by the strikes held since December by the SEPLA pilots union which have cost the company some three million euros per strike day.

The purpose of the measures is to reduce Iberia’s unit costs and to raise productivity. Specifically, pilots’ payroll costs will be cut by 20% or 62 million euros, and productivity will be increased by 25%.

The company decided that the measures will apply to the pilots alone, who are the only employees who, following more than two and a half years of negotiations, have failed to reach an agreement on a new union contract, such as those agreed by ground staff and cabin crews.

The cut in unit costs is to be achieved via a 12% reduction in pay scales and other measures bringing an additional 8% decrease in pilots’ payroll costs, such as the elimination of certain automatic pay hikes linked to the inflation rate. Another measure will adjust remuneration to pilots with 15 years’ seniority who choose to work fewer hours, so that pay is proportional to the hours worked. The guarantee to pilots who lose their licenses will be cut from 90% to 45% of their pay, and incentive pay for attaining objectives will be dropped.

Productivity will be increased by raising the number of hours worked by Iberia pilots, within legally established limits. Iberia will now set a limit of 900 flying hours per year for pilots, raising it from the 820 or 850 hours (depending on distances flown) limit stipulated in the last collective bargaining agreement, although the real number of hours flown is closer to 650. Seniority-linked extra vacation days will be dropped, and there will be changes in on-call arrangements. Lastly, the composition of flight crews will be modified within the limits of current legislation.

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Iberia financial manager José María Fariza commented that “the company accepts the necessity of applying these measures within the current framework of labour laws and agreements, as the sole means of ensuring success in the difficult situation faced by the airline”, adding that “this battery of actions aimed at making Iberia profitable is in line with what comparable airlines are doing and is absolutely necessary to enable us to compete successfully in a globalised market”.

Meanwhile, Iberia today called on the SEPLA pilots union to return to the bargaining table to negotiate a new contract and to call off the strikes that do so much damage to the company and the customers who maintain it.

Iberia expresses its regret that SEPLA representatives decided not to attend the meeting called for today in which the company intended to explain the new measures it is proposing to implement, in an indication of if its lack of interest in negotiations. Iberia has invited them to new meetings called for the 18th, 19th, 20th, 23rd, 24th, 25th, 26th and 27th of April, and in order to facilitate their attendance has abstained from assigning flying duty to any SEPLA representative for the next 15 days.

As in earlier strikes, the company expresses its regrets for any inconvenience caused and pledges to use all means at its disposal to minimise the strikes’ impact on travel plans. Iberia also thanks all its other employees for their efforts in providing the best possible services to our customers.