Kieran Daly/LONDON
IBERIA'S LATEST restructuring plan now being considered by the European Commission (EC) includes a proposal to sell off one-quarter of the carrier by early 1997.
The move is part of the airline's proposal to allow it to receive a Ptas130 billion ($1 billion) cash injection from the 75% state-owned Teneo group.
A source at the carrier says that the intention is for 10% of the airline's equity to be transferred to the workforce and for a further shareholding, worth some Ptas26 billion, to be sold to a single, as- yet unidentified, airline partner.
The EC is to announce on 15 March whether it approves the Spanish Government's plan for detailed consideration or rejects it. Ptas25-30 billion of the money would be used to pay for the planned 3,500 further redundancies and the rest to "kill debt".
Iberia insists that the proposed injection does not constitute state aid, and says that such assistance should be allowed in view of "exceptional circumstances" arising since it last received a cash input in 1992.
The airline's forthcoming 1994 results are expected to show an operating profit of Ptas5 billion compared with the forecast loss of the same amount. That compares with an operating loss of Ptas17 billion in 1993 and is a figure that is being used by the Spanish Government to bolster its case before the EC. The Government is also relying on Iberia's hoped-for unit-cost reduction from 7.4¢ per available seat-kilometre (ASK) in 1993 to 6.5¢ per ASK in 1995.
Other moves envisaged in the restructuring include capacity reductions totalling 5.4% on domestic routes, 10.1% in Europe and 7.5% internationally. The fleet is to be cut by 13% and the scheduled services operated by Viva Air will be brought back into Iberia, leaving Viva as a pure charter operation. Iberia is even considering bringing Viva back into the core airline altogether.
Meanwhile, the Iberia Group has been conducting detailed valuations of its various subsidiaries, while stressing that none is actually for sale at present. Domestic airline Aviaco is the most valuable.
Airline officials do say, however, that they would like to offload most of the 85% shareholding in Aerolineas Argentinas, but they see no prospect of realising a respectable price for the foreseeable future.
Source: Flight International
