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.

Drama for Iberia

Now that the BA/Iberia merger is going ahead, it looks as if Iberia are in for an interesting time with Willie Walsh as Group CEO.

I have a feeling that Mr Walsh does not like arriving at companies that are in a state of anything less than crisis – if there are no crises visible, he is sure to find some. Even if the situation is already bad, Willie will discover that it is even worse than imagined.  Some less friendly souls would say he is a bit of a drama queen.

Unfortunately, he won’t have to look too far to find trouble in Iberia.

The company has never got over being state-owned. Whilst there have been improvements, there are too many pilots, cabin crew and ground staff who fail to respond to management requirements. Their safety record should be better than it is and their position in world rankings of airlines for customer service is dire.

This time, Willie doesn’t have to worry – Iberia really is in a worse state than most people imagine.

With British Airways, Willie has made vague threats that if pilots or cabin crew do not like his terms, they can leave – en masse if necessary. If this were to happen at British Airways it would be a cause for real concern – if it happened at Iberia, it could well be the best thing for the airline. The airline needs a new start and getting rid of some entrenched pilots and cabin crew would be the best way to begin.