International Airlines Group (IAG), the parent company of Iberia, British Airways, Vueling, Aer Lingus, and LEVEL is reassessing its strategy for Iberia Express due to stalled pilot negotiations with the Unión Profesional de Pilotos de Aerolíneas (UPPA).
IAG’s CEO, Luis Gallego, expressed regret over the lack of agreement and mentioned the need to consider alternative options for maintaining competitiveness at the Madrid hub.
The failure to reach a contract agreement has led IAG to potentially freeze Iberia Express’s growth and shift resources to other operations, including LEVEL.
IAG is also planning a fleet expansion for LEVEL, moving from five to eight aircraft by 2026, indicating a focus away from Iberia Express.
The broader context involves IAG’s push to strengthen its position in the Spanish market, with significant investments planned for fleet modernisation and operational efficiency.
As with Aer Lingus, Iberia’s mainline pilots secured a labour deal in August 2024, extending to 2027, with profit-sharing and fleet growth tied to performance metrics like punctuality and customer service. This agreement allocated additional aircraft to Iberia and LEVEL but left Iberia Express’s growth stalled. In cotnrast to Iberia mainline, Iberia Express has a history of labor tensions, with pilots and unions frequently clashing over cost-cutting measures to maintain its low-cost model.
IAG is also streamlining operations through initiatives like South Europe Ground Services (SOEGS), a new ground-handling company for its Spanish carriers, to improve efficiency.
The group is investing heavily in fleet expansion, with orders for 71 long-haul aircraft (Boeing 787s and Airbus A330s/A350s) and plans to modernize Iberia’s fleet, including new A321XLRs for North American routes.
Luis Gallego shared “Cooperation has been vital to Iberia Express’s success. Without a resolution, Iberia Express risks reduced operations. We see Madrid-Barajas as a growing hub over the next decade. The termination of IAG’s acquisition of Air Europa has refocused our attention. A pivot to LEVEL signals our focus on diversifying low-cost offerings.”
