Spanish airline Iberia announced plans on Thursday to create a budget airline called Iberia Express, as part of a restructuring to reduce its costs and return to profit.
Iberia Express will begin flights by summer 2012 from Madrid Barajas airport and will handle some of Iberia’s loss-making short and medium-haul routes.
The new airline will compete directly with easyJet and Ryanair – which have overtaken Iberia to become the biggest airline operators on routes between Europe and Spain.
However, Sepla, the Spanish pilots’ union said the plans for a new airline broke agreements signed with Iberia during its merger with British Airways last year to form International Consolidated Airlines Group.
It raises the possibility of a strike by Iberia’s pilots and cabin crew. In a statement, Sepla said: “Following this decision, the pilots will take appropriate legal actions, together with other [worker] groups affected by the creation of a new company,” Sepla said.
IAG’s Iberia hopes the new airline will help to stem its losses.
The carrier reported a €78m ($105m) operating loss for the six months to June 30, while BA reported a €210m operating profit in the first half of 2011.