IAG still striving for Spanish short-haul solution

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International Airlines Group carrier Iberia is continuing to look at tackling costs on short-haul operations out of Madrid and is considering extending or even expanding routes passed to partners Air Nostrum and Vueling if it cannot secure a new labour cost structure.

Iberia struck a deal with Air Nostrum and Vueling earlier this year to contract out some aircraft and flights to the airlines as it continued to strive for a new deal on short-haul operations with its pilots. Those deals run until the end of the summer season.

Speaking during a first quarter IAG results conference call today, Iberia chief executive Rafael Sanchez said: "We need a structural change in the short-haul operation. It is a loss-making operation and we don't want to sustain a loss-making structure.

"Clearly we are still working to try and get some structural change to our short-haul operation. Depending on the outcome the possibility exists we might recover back those activities we passed on to Air Nostrum and Vueling, it might be we keep on this agreement or it might be we deepen the current agreement to pass on even more routes."

Any change would take effect from November with the winter season but Sanchez stresses it is too early to anticipate what the outcome will be. Both Sanchez and IAG chief executive Willie Walsh said there is enough flexibility in the existing agreement that November is not a deadline. "We have a lot of flexibility, but we are determined to solve it," said Sanchez.

Added Walsh: "We know we need to respond with a structural change to the short-haul. The feed [into Madrid] is importantbut a presence in the short-haul market just for the sake of being present is not something we are looking at."