A 53% stake held in the flag carrier by state holding company SEPI will be floated. Iberia president, Xabier de Irala, has been talking up the issue, pointing out that parameters set out in the company's 1997-9 strategic plan have been more than exceeded, with accumulated pre-tax profits, at c671 million ($713 million), 54% higher than budgeted.
Labour unrest and enforced price cutting this year will halve bottom line performance and reduce the airline's overall valuation before its sell-off.
For Iberia's partners in the oneworld alliance, it is the Spanish airline's Latin American network which remains its most attractive asset. While Barajas is likely to retain its status as the European hub for that region, every other international route operated from Madrid by Iberia is under attack from rivals. Low cost carriers Go and easyJet are making major inroads into the tourist market, while domestic rivals Spanair and Air Europa are tooling up to wrestle market share from the Spanish flag carrier.
Spanair, part-owned by SAS, has recently signed a codeshare agreement with Lufthansa involving 215 weekly flights between Spain and Germany. In the long term, the two will collaborate on other European routes. That will allow Spanair to feed passengers to Lufthansa's long-haul services via its extensive Spanish domestic network, which serves 10 regional airports, in addition to Madrid and Barcelona.
The Palma-based carrier, which expects to end 1999 with profits of Ptas2.5 billion ($15.7 million) on a turnover of Ptas 90billion, has signed a deal with Airbus to buy 10 A320s and four A321s, and plans to lease a further seven aircraft of the same family.
Air Europa has announced that it is being courted by Swissair and Air France, as well as by the NW-KLM-Alitalia Wings alliance, effectively putting to an end rumours linking it with a possible long-term commercial tie-up with Iberia. Previously, Air Europa had found it financially expedient to wet-lease 12 of its own aircraft to Iberia, prompting rumours of its imminent demise.
But with 12 Boeing 737-800s and three Boeing 767-800s on order, the carrier is to double frequencies from Madrid and add 40% capacity on services to provincial cities. Company president Juan José Hidalgo comfortably predicts a 30% increase in profits on the year and revenue growth of 15%.
Iberia is hitting back at competition. From the end of October it was due to begin codesharing with BA franchise Air Liberté between Paris and Malaga and Alicante as part of a growing relationship with its UK shareholder in Europe.
Source: Airline Business
