Yesterday we reported on the expectation that British Airways is expected to become a smaller operator in the aftermath of the coronavirus. It’s not the only one; Lufthansa and EasyJet are just two other European operators who are downsizing. But many have concerns about the aggressive approach taken by BA as it intends to reduce staff numbers by 12 000, perhaps dismiss many pilots and rationalise the contracts of flight attendants. From news reports today, it seems that BA’s sister carrier, Iberia might be going down the same road.
Luis Gallego, the president of Iberia, has said in Madrid that Iberia’s fleet will be reduced over the next five years. He said that the current reductions are not temporary, to cope with reduced demand as a result of the coronavirus outbreak, but rather a structural shift. The cause, he said, was the increasing debt burden placed on the airline as it struggles to survive the epidemic and given that some of its competitors receive far more significant amounts of state aid.
Mr. Gallego, who is due to take over as chairman of the IAG group in September—pointed out both the reliance of the Spanish economy on tourism—it’s 12% of GDP and that of tourism itself on air transport. About 80% of foreign tourists to Spain arrive by air. Of that, there is no doubt, but certainly, the majority of tourists use budget rather than legacy carriers to make the short hop from other European centres.
He will earn his pay packet as the chair of IAG. He will have to grapple with the difficulties of re-establishing the networks of BA, Iberia and Aer Lingus of Ireland, and also of determining the shape and size of the legacy carriers in the face of intense competition by budget carriers of which IAG has two; Vueling and Level.