Iberia's chairman said high fuel prices and "unfair" competition from loss-making airlines posed the biggest challenges to the Spanish flag carrier this year.

Fernando Conte declined to confirm a newspaper report that Iberia was considering closing some routes because of fierce competition from low-cost airlines, especially Ryanair and easyJet.

But he did say Iberia was concerned about what he called "distortions" at the smaller Spanish airports, which are the favorite destinations of budget airlines.

"We're very worried about distortions at certain airports... It seems deeply unfair to us," Conte told reporters. "There are distortions caused by subsidies and covert aid. Transparency in the accounts of small airports doesn't exist."

Quoting sources familiar with the sector, daily newspaper El Pais said several routes out of Barcelona, in the northeastern region of Catalonia, would be halted because Ryanair flies to numerous destinations from its Catalan bases at Reus and Girona.

El Pais said Iberia management estimated that incentives from local governments eager to attract low-cost airlines to their regions amounted to aid worth between 10 and 17 euros (USD$13 to USD$22) per ticket.

Conte said about 50 discount airlines were operating in Europe, of which 30 were active in Spain, but only two were making any money as far as he knew.

"We have doubts about these airlines' viability. There is a need for consolidation on many fronts," he said.

Conte added that low cost airlines were not the only problem. He also took issue with Italian carrier Alitalia and with US airlines operating under Chapter 11 bankruptcy protection. These include the second-largest US carrier, United Airlines. Iberia is one of eight European airlines that have filed a complaint with the European Commission about an Alitalia restructuring plan.

Conte said Alitalia was effectively financed by Italian taxpayers. "We hope that Brussels is going to put an end to this abnormal situation," he said.