Are IAG losing the plot with Iberia?

Iberia’s problems are well known. It has too many expensive staff and strong unions which resist any form of change. For the last eighteen months, the airline has been battling the unions to put the airline on a better footing but the unions have resisted. Now, IAG are getting tough and threatening up to 4,500 job losses, salary cuts and a reduction in the planned fleet and, if agreement cannot be made, it is clear that part of the airline will simply be hived off.

So far, all that sounds fairly normal. This is the standard medicine for a badly-performing company that is used to state ownership and a quasi-monopoly. 

Except something is missing.

Iberia is in terrible shape not just because of having too many overpaid staff but because it is generally regarded as a bad airline. Many Spaniards have avoided the airline because of its poor service whilst foreigners rarely fly with them out of choice. Even without the constant threat of strikes, the airline offers a service that is barely up to the standards of its European competitors and many of its ground staff and cabin crew are indifferent, if not downright hostile, to passengers.

IAG are tackling the first part of the problem. Costs need to be cut and – somehow – IAG will succeed but they appear not to be doing anything at all to make the airline more attractive to passengers. Of course, it is difficult to spend money on service improvements and staff motivation whilst slashing jobs and salaries but it is not impossible. Staff who remain with the airline need to feel that they will be working harder and getting paid less but that they will be part of a world class airline again. So far, the lack of communication on future plans to either staff or customers has been shocking.

This is a potentially fatal flaw because, even if the airline can be made to operate efficiently, without passengers, they will fail.

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