Iberia is gearing up to fight increasing competition on its international and domestic routes, with "a new aggressive commercial policy" says, chairman Xabier de Irala.

"A lot of things are going to change-We will defend our leadership with all the weapons available," he pledges. Iberia has waded into a domestic fares war, by cutting prices by 25% on key trunk routes.

Irala says that the flag carrier, which controversially received a second round of state aid late last year, is still on course to return to profitability this year ending eight years of heavy losses. Iberia was showing a Pts11 billion ($85 million) pre-tax profit after the first eight months and expects earnings to stay at this level for the full year.

De Irala confirms that the carrier is in "well advanced" talks over a strategic alliance with American Airlines and British Airways.

Source: Flight International