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Iberia will scrap Aviaco brand when pilots agree to merger

Max Kingsley-Jones/MADRID

Iberia is planning to absorb its Aviaco domestic subsidiary at the earliest opportunity, but will not take any action until pilots at the two airlines resolve union issues. Details of the move emerged as the Spanish flag carrier revealed a 117.5% increase in net profit last year, to Ptas37.2 billion ($250 million), with turnover up by 10% to Ptas667 billion.

Iberia took full control of Aviaco a year ago, adding state holding company SEPI's 67% stake to its 33% share. John Wilkinson, Iberia's senior vice-president of marketing, says the two airlines are already operating as one commercially, and plan a full merger "as soon as possible", depending "-on the pilot unions agreeing to be integrated" and resolving seniority issues.

Wilkinson hopes the pilot issue will be resolved this year, allowing the Aviaco brand to be eliminated. A fleet revamp of the subsidiary is under way, with Iberia's 24 Boeing MD-87s to be transferred to Aviaco over the next two years, replacing McDonnell Douglas DC-9s. The MD-87s will operate alongside a fleet of 13 MD-88s.

Iberia president Xabier de Irala, meanwhile, has outlined the timetable for privatisation of the airline following the recent agreement with British Airways and American Airlines on the sale of a 10% shareholding. A 30% stake will be sold to institutions such as banks "by the end of March", he says, with the remaining 54% (6% is already held by employees) floated "during the summer" through an initial public offering.

Irala says the partial flotation of the Amadeus computer reservation system, in which Iberia holds a 29.2% stake, has been delayed until later this year or early 2000. He blames the hold-up on the system's possible merger with Worldspan, which would boost its value. The price of the BA/American holding will in turn be affected by the value of Amadeus.