Iberia Express arbitration ‘back to square one' after court ruling

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The Spanish High Court has overturned the original arbitration process that nominally ended the conflict between Iberia and pilots union SEPLA, saying it was technically flawed and should be restarted.

Reacting to the decision, SEPLA tells Flightglobal that the ruling "brings us back to square one" and that industrial action coordinated with other unions remains a likely outcome.

Its dispute with the Spanish flag carrier revolves around Iberia Express, a low-cost subsidiary set up by parent company International Airlines Group (IAG) last year to optimise Iberia's short-haul network and reduce operating costs.

The creation of Iberia Express prompted several days of strike action by SEPLA over pay and working conditions last winter.

In an effort to resolve the conflict, the Spanish government had appointed an arbitrator, Jaime Montalvo, to mediate between the parties. His ruling in May - which upheld the legality of creating Iberia Express but laid down certain conditions - was subsequently appealed by the airline.

Issuing its judgement on that appeal, the High Court now says the arbitration process was flawed because Iberia Express was not present at the hearing. The subsidiary should have been involved, magistrates say, because the arbitrator's decision affected its recruitment policy.

Iberia declined to comment on the latest developments, though a spokesperson says the High Court ruling is "in-line with" what Iberia Express had been pursuing.

Analysts believe restarting the arbitration process could ultimately benefit the parent company, because SEPLA is prohibited from staging strikes while mediation is underway. This creates scope for IAG to unilaterally push through restructuring at Iberia and Iberia Express.

The High Court says arbitration will restart after both parties have heard Iberia Express's arguments.

It emphasises that the root causes of the dispute remain an ongoing concern, adding that the current ruling does not by itself resolve the matter. A formal agreement over the establishment and operation of Iberia Express must still be reached, it says.

SEPLA says it still considers the creation of Iberia Express "illegal" and it questions whether Iberia's weak financial performance justifies the deep-rooted restructuring pursued by IAG.

Additional reporting by Miquel Ros