Job cuts at restructuring flag carrier airline

The Spanish airline Iberia is shedding 16% of its workforce after recording operating losses for the last four years. The company put forward two plans, one in November 2012 that would have led to 4,499 job cuts, and a second earlier this year that reduced job losses to 3,807. Both were rejected by unions, the second triggering threats of strike action. A third plan from a government-appointed mediator has reduced job losses to 3,141 and has been accepted by more than 90% of the workforce.

Background

Iberia, the Spanish flag carrier airline, currently employs nearly 20,000 people. In 2010, it became part of the holding company International Airlines Group (IAG), the third largest worldwide commercial airline by revenue.

Iberia recorded losses of over €850 million between January 2008 and September 2012, €262 million in the first nine months of 2012 alone.

Restructuring proposals

In November 2012 the company announced a restructuring plan which included 4,499 job cuts. The cuts would have affected 3,030 ground workers, 932 cabin crew and 537 pilots.

In addition, IAG’s management wanted Iberia to reduce its route capacity by 15% in 2013, and the airline’s employees to accept wage cuts of between 25% and 35%. However, this proposal was rejected by the three most representative unions within the company, the General Workers’ Union (UGT), the Trade Union Confederation of Workers’ Commissions (CCOO) and the Spanish Pilots’ Union (SEPLA).

IAG responded on 12 February 2013 by announcing the launch of a new Collective Redundancy Procedure (ERE), which reduced the number of job cuts to 3,807, affecting 2,735 ground workers, 759 crew members and 313 pilots. Under this second plan, the company offered the minimum compensation required by Spanish legislation, 20 days per year worked, capped at 12 months’ pay.

When the required consultation period began, all the unions involved strongly rejected this proposal too. UGT and CCOO, the most representative unions among ground workers and cabin crew, called for three periods of strike action on 18–22 February, 4–8 March and 18–22 March, a total of 15 days.

Ministry mediator appointed

The Ministry of Public Works viewed the call for strike action as a serious threat to the economy. The ministry intervened, appointing a mediator to help resolve the conflict. Professor Gregorio Tudela of the Autonomous University of Madrid was asked to propose an alternative restructuring plan. Both the unions and Iberia accepted the mediator’s intervention and, on 6 March 2013, he presented his proposal.

The alternative plan reduces the number of dismissed workers to 3,141, 16% of the entire workforce, and increases the compensation offered to 35 days per year worked. Under this new plan, the dismissals would affect 2,256 ground workers, 627 cabin crew and 258 pilots.

It proposes wage cuts of 7% for ground workers and 14% for cabin crew and pilots, and a wage freeze until 2015. Voluntary redundancy and early retirement measures will be prioritised. Early retirement plans will be available for cabin crew aged 55 and over, ground workers aged 58 and over, and pilots aged 60 years and over.

Finally, the proposal includes a commitment to negotiate in order to improve productivity, which will take place in the month following implementation of the plan.

Union reaction

On 13 March 2013, the mediator’s proposal was accepted by Iberia and almost all the unions that represent ground workers and cabin crew – UGT, CCOO, Sitcpla, Asetma, the Workers’ Trade Unionist Confederation (USO) and the Workers’ Assembly Committee (CTA-Vuelo). The remaining period of strike action threatened for 18–22 March was called off.

However, the pilots’ union SEPLA did not accept the proposal and called for a members’ vote on the proposals, held between 3 and 7 April 2013.

Justo Peral, President of the SEPLA pilots’ union section at Iberia, was quoted in a newspaper article (in Spanish) advising pilots to vote against the agreement, saying that he felt that the early retirement plans represented age discrimination. He pointed out that, under the criteria proposed, none of the 258 pilots who might be made redundant would be entitled to take early retirement. More than 90% of Iberia’s SEPLA members voted against acceptance.

However, Iberia has stated that even taking the pilots’ opposition into account, the proposal has still been accepted by 93% of the company’s staff. It has therefore decided to implement the mediator’s proposed restructuring plan.

Pablo Sanz de Miguel, CIREM Foundation

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