Global Politics

Spain's Iberia Airlines Announces Layoffs

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Credit: REUTERS

Staff stand under an Iberia airplane parked on the tarmac at Madrid's Barajas airport November 9, 2012. British Airways owner IAG will axe almost a quarter of Iberia's workforce and cut capacity to save the loss-making Spanish flag carrier and restore group profitability. REUTERS/Sergio Perez (SPAIN - Tags: TRANSPORT BUSINESS EMPLOYMENT)

Spain's main airline, Iberia, will lose a quarter of its staff to layoffs. That's 4,500 jobs.

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Spain's unemployment is already the highest in the European Union. So this hardly comes as welcome news for a government trying to avoid an international bailout.

When British Airways merged with Iberia in 2011, the joint venture's new slogan was, "Stronger Together." It hasn't exactly worked out that way.

The news came from Bloomberg TV Friday: 4,500 jobs, 25 planes will go. Iberia, long a symbol of Spanish identity, is reeling.

The conglomerate that owns the airline, International Airline Group, or IAG, said Iberia is losing more than $2 million a day. IAG added without layoffs and restructuring it'll be grounded for good.

Iberia isn't just any old airline. For many it's inseparable from Spain itself. An indelible part of the national identity. When it merged with British last year, some worried for its future in the hands of foreigners. Friday some Spanish media reacted to the layoffs almost as if the country itself were under attack.

On national radio Friday morning, journalist Ricardo Martin said the news was just terrible. He said, "the truth is we're facing the dismantling a company that belongs to all Spaniards. "

Actually, Iberia hasn't been Spanish for over a decade. It was privatized and sold in 2001. Although this year the Spanish government did accidentally become its biggest shareholder again, when it was forced to nationalize a bank — and Iberia shareholder — called Bankia.

Iberia officials acknowledge they've lost their competitive edge to low-cost lines such as RyanAir and EasyJet. That's why Iberia started its own low-cost venture, called Vueling. But Friday, as IAG was announcing Iberia's massive layoffs, it took control of Vueling via stock purchases. That's angered Iberia execs further.

But Vueling makes money. So does IAG's other airline, British Airways. But the president of the Spanish airline pilots' union, Justo Peral, said BA has deliberately brought Iberia to its knees.

"They want to condemn Iberia to death," he told Spanish radio, "strip it of its very Spanish-ness. After all we Spaniards have invested in Spanish infrastructure. As the Brits hire more staff and grow their business, financing themselves with shares of Iberia, they dare to fire thousands of our workers."

Peral warned of massive protests.

It isn't all bad news in Spain Friday. An iconic Spanish company may be up against the ropes, but a major carmaker has announced plans to hire 250 Spaniards as it expands operations in Sevilla.

That company is French. Renault. It's not a lot of jobs. But with unemployment at 25 percent nationally, every bit helps.

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