Iberia is finally cleared to join the oneworld alliance, having tied up agreement with American Airlines and British Airways on their acquisition of small minority stakes in the Spanish flag-carrier. Iberia also now appears to be on course to finish off the year with its long-awaited privatisation.

Iberia's invitation to join oneworld comes just two weeks after the alliance was given its official launch at the start of February. Five carriers are already on board and Finnair is set to join them during the year.

The invitation followed the agreement of Iberia's terms of sale by Spanish state holding company SEPI under which American Airlines and British Airways will take 1% and 9% stakes, respectively.

The cost of the investment has been set at a maximum of Ptas58 billion ($393 million), to be adjusted depending on the valuation of Iberia's 29.2% holding in Amadeus, and the eventual flotation price. The two carriers are committed to holding Iberia stock for a minimum of three years. BA alone is set to profit to the tune of £25-30 million ($42-50 million) annually from Iberia, according to analysts.

With the strategic partnership sealed, SEPI is pushing ahead with getting a "nucleus of Spanish capital"to buy a 30% stake, which it plans to have in place by April. The remainder of the stock will then be floated in time for full privatisation by year end.

There are clouds on the horizon, however. Pilots at Aviaco and Viva Air, the two subsidiaries that are due to be integrated into Iberia's mainline operations, are in dispute with the management over a shortage of pilots and fears over a loss of seniority.

Aviaco pilots began a series of one day 24-hour strikes in January, while pilots at charter operator Viva Air also planned to take strike action for two days in February to coincide with the Aviaco action. However, because of "essential" service regulations, less than 40% of Aviaco's flights were affected.

Pilot's union SEPLA wants the company to hire more pilots at Aviaco and to keep Viva Air running as a separate company. Iberia maintains that Viva Air is no longer viable, and says pilots at both subsidiaries must come to an agreement about new pay scales.

Despite these problems, Iberia remains optimistic, projecting a profit of Ptas18 billion for 1999.

Source: Airline Business