Iberia launches low-cost airline

Spanish airline Iberia launches its new low-cost carrier for Europe on Sunday, against a backdrop of angry protests by workers who fear for their salaries. "This is a fundamental project for the Iberia group," chief executive Rafael Sanchez-Lozano told reporters as he unveiled the new carrier, Iberia Express, ahead of Sunday's inaugural flight from Madrid to Alicante. "It will allow short- and medium-haul operations that are currently not profitable to become profitable, to make the group grow," he said. The group behind the venture is the International Airlines Group formed by the merger of Iberia and British Airways in 2011. "It is an absolutely necessary element of the group's strategy," he said. But Iberia pilots and other staff have staged several days of strikes in protest at the launch of the new offshoot. Unions complain that lower salaries are being offered to new recruits on the budget airline and fear that jobs will be shifted away from Iberia. Management says the conditions of existing staff will not be affected. The government has appointed a mediator to handle negotiations between pilots and the management. A few dozen protesters demonstrated outside Iberia's headquarters during Friday's news conference waving banners that read: "Iberia Express will destroy 6,000 jobs." Iberia Express will start on 17 routes, serving destinations including Ibiza and Majorca in Spain and further afield: Dublin, Naples and Amsterdam. It plans to expand by the end of 2012 to serve more than 20 destinations, with 14 aircraft and 500 staff carrying 2.5 million passengers this year, the company said. The carrier aims to turn a profit from this year and to save 100 million euros ($130 million) a year from 2015 by replacing regular Iberia flights on those routes with Iberia Express services. "We are not a traditional low-cost airline," said the director of Iberia Express, Luis Gallego. "A customer of Iberia Express will receive the same services as on Iberia," the regular flagship carrier, he added, explaining that options will range from "express" travel without baggage or assigned seating, to full business class. "Prices will be more accessible because costs will be lower," Gallego said. Iberia has come under pressure from its British partner to make savings after the Spanish line logged a loss of 98 million euros compared with some 620 million euros of profits for BA. It faces tough competition meanwhile on its home ground, particularly from Irish budget line Ryanair, which overtook it in passenger numbers last year. "The majority of (low-cost airline) companies are in the red and others are collapsing," said Gallego. Barcelona-based budget airline Spanair, which ran 200 flights a day, shut down abruptly in January after going bankrupt, stranding tens of thousands of passengers. Another, Air Europa, has cut hundreds of jobs.