Iberia's plans for a new airline, presented in the midst of merger talks with British Airways, shows the company bracing for a tough future, with or without a partner, analysts said Friday.
The announcement of the new network airline within its 2012 strategic plan surprised the market, considering its merger plans with BA, which has hinted at a tie-up before the end of the year.
But regardless of a merger, Iberia warned of the need for innovative measures to ensure its viability as the industry weathers the worst crisis in a decade.
"These are challenging times and these measures highlight the seriousness of that challenge," said Societe Generale analyst Jonathan Wober.
"It makes sense for Iberia to get on with what they need to do for themselves, regardless of progress with the BA merger talks," he said.
Iberia's new airline is planned for 2011 and will be based in Madrid to feed traffic from its loss-making short- and medium-haul routes to its growing long-haul network.
The new strategic plan was the first by Iberia's chairman Antonio Vazquez, a known deal-maker who was appointed in July to revitalize the airline's stalled merger talks with BA, which began over a year ago.
But Iberia and BA have so far failed to agree on their relative values and as both management teams firefight the severe plunge in passenger traffic that has fueled consolidation in the industry.
Since taking over, Vazquez has implemented swift measures to boost revenue and cut costs for the company, which posted a EUR277 million euro operating loss in the first half.
"The new airline could've been conceived with the BA merger in mind or it could mean they're preparing for an eventual stand-alone future should no merger take place in the medium term," said Joaquin Garcia-Romanillos, analyst for BPI.
BA declined to comment on another airline's structure, saying only: "Our talks with Iberia with regards to our proposed merger continue."
Iberia's new strategic plan also calls for further capacity cuts, lay-offs and salary freezes, and will face stiff opposition from unions.
Iberia has already canceled about 400 of 2,000 flights scheduled for next Monday and Tuesday due to a planned strike by flight attendants to put pressure on the airline during collective wage talks.
