International Airlines Group and Rafael Sánchez-Lozano have decided by mutual agreement that he will step down as chief executive of Iberia and from the IAG board with immediate effect.

He will be replaced by Luis Gallego who is currently chief executive of Iberia’s subsidiary Iberia Express.

Luis has joined the Iberia and IAG boards.

The move comes as Iberia battles to cut costs and return to profitability.

The airline recently announced it would shed 5,000 jobs as part of a radical overhaul of its operations.

Willie Walsh, IAG chief executive, said: “I would like to thank Rafael for his hard work and commitment to Iberia.

“He has led the airline through a very difficult period in the midst of a deep recession and has completed the first important step towards returning the airline to profitability.

“Luis Gallego has extensive experience across a range of international airlines. He was instrumental as chief executive of Iberia Express in creating an airline that is a great success.

“It is profitable, punctual and popular with customers and has created 500 much needed jobs in Spain.

“Iberia is entering its next transition phase and I have every confidence that Luis can return Iberia to profitable growth”.