Iberia, SAS Restructure in “Fight for Survival”; Other European Airlines Cut Jobs and Assets
International Airlines Group — which was formed by the merger of Iberia and British Airways — has announced a restructuring of Iberia which will eliminate a minimum of 4,500 jobs, downsize its fleet of aircraft by 25 percent and reduce capacity by 15 percent; while SAS Group plans to eliminate greater than 7,000 jobs and sell off assets of Scandinavian Airlines System, or SAS.
Both airlines are struggling just to survive. International Airlines Group cites a deepening recession and heightened competition from low-cost airlines as factors pertaining to its operating loss of US$150 million for the year, while SAS has been unprofitable on an annual basis for five consecutive years.
Employees are seeking to purchase Wideroe, the largest regional airline of SAS which currently serves its Norwegian market. Meanwhile, some FlyerTalk members are concerned about future flights on which they will be passengers on SAS.
The Spanish and Scandinavian airlines are not the only ones eliminating jobs. Deutsche Lufthansa AG — parent company of Lufthansa, which has been plagued by labor issues over the last several months — is reportedly cutting 3,500 administrative jobs and as many as 1,000 catering positions; while Air France-KLM Group — the largest airline company in Europe — recently announced its intention to eliminate 1,300 positions at KLM in addition to 5,000 jobs already being cut from Air France, even though earnings reported for the third quarter are better than expected.
Could the landscape of the commercial aviation industry in Europe be in for a major upheaval? Will other airlines follow suit and eliminate jobs and assets just to attempt to survive? What can be done to reverse this trend? Could more airline mergers be in order?
What are your thoughts?