Don't cry for me, Iberia

Economia Digital has asked for my opinion on the upcoming restructuring process of IBERIA.

Iberia is at risk of disappearing due to its past, and its strategic conception, which has never been revised over time. A company which was born during a military dictatorship and which also grew suckling on the teat of a dictatorship, has given greater value to geopolitical considerations than to those of economic feasibility, taking the company to its present position, which is a cul-de-sac.

Iberia was founded in 1927 by the Basque businessman Echevarrieta, and was given impulse by the then dictator, Primo de Rivera, with a monopoly on Spanish air transport. In 1929 it was obliged to provide its routes and planes to the recently created CLASSA (

Concesionaria de Líneas Aéreas Subvencionadas, or Subsidised Airline Concession) , under the direction of the Directorio Militar, to create a monopoly with a single company. With the arrival of the Second Spanish Republic in 1931, CLASSA was dissolved and LAPE was created. In those years, Iberia was a company without any real activity. In 1937, during the Spanish Civil War, Iberia was reactivated and was converted into the airline of the Nationalist side, having its headquarters in Salamanca. It soon became part of the network, with Mussolini-esque airs, of the INI(Instituto Nacional de Industria). When, eventually, the Spanish transition came, the diverse governments at the time dealt with the privatisation process - demanded if Spain were to enter the then EEC – late and inefficiently. Whoever has been in power in Spain, be it UCD, PSOE o PP, privatisations have happened in a way which has centralised and concentrated power in Madrid, handing the jewels of the crown to a reduced oligarchical caste.

In this context, at the beginning of the 1990’s the directorship of the INI, majority shareholders in Iberia’s capital, pursued a strategy of growth of the company towards the South American market, to prepare the liberalisation of air markets in the European Union. The result of this strategy of recolonisation of the Americas was a failure. There were important losses for Iberia. INI, via the Spanish government, had to apply for two capital injections.

The year 2001 represented a watershed moment for the company. Its process of privatisation culminated in its’ going public in April of that year. It became part of the Oneworld alliance, along with British Airways and American Airlines, among others. Its shares were traded in the Ibex 35, until fusion came in 2011. The result, a holding called International Airlines Group(IAG), is that which is now imposing, for the first time in 85 years, a restructuring process using economic criteria, which may lead to the dissolution of the company, according to some experts.

As a user, virtually by obligation, of Iberia, I promise that I will not "cry for thee, Iberia". A company created and nurtured by the state, and which has systematically joined inefficiency with politically motivated prejudices in its policy-making and decisions, is a diplodocus which cannot evolve. AENA’s protected company (or is AENA an organism in the service of Iberia?) has demonstrated its preference for Madrid’s airport, in detriment of that of Barcelona. Iberia has disguised its shame next to Iberia, given that, until the year 2010, AENA had not presented its declaration of profit and loss, in relation to each of the airports in its network. Iberia has decided to abandon El Prat (Barcelona’s airport) entirely, leaving it as a secondary airport, and a hub for low-cost airlines. Albeit, conserving the Air Bridge linking Barcelona and Madrid, the second most profitable in the world. (Are you asking yourselves why this anomaly is allowed to persist? Essentially it is because of the political dependence of Catalonia, the Iberian Peninsula’s most productive region, on Madrid). I lived at first hand the unfair play practised in unison by the duo AENA/Iberia when it was discovered that in at least twelve cases AENA had authorised and encouraged stopovers in Madrid of international companies, expressly excluding Barcelona. One could denounce the case of Singapore Airlines, which had an agreement for more than two years with Spanair, which enabled stopovers in Barcelona on its routes to Sao Paolo. AENA impeded this agreement and finally, this particular prey was ceded to Iberia. The creation of the hub in Miami also formed part of this strategy in favour of Barajas. There has been a systematic blockage of direct flights from Barcelona to the USA, allowing US companies to cover this profitable route, in which the flights, at the end of the first year, were planned to double in frequency. I could go on, but there is not sufficient space.

To sum up, and regretting the limbo in which thousands of workers may find themselves, I would insist that a company conceived as a weapon of the Madrid oligarchy, and not as an instrument of public service, which ought to be efficient and equitable for all Spanish citizens, deserves to be consumed by the British. Seen from Catalonia, at least British imperialism is more pragmatic and economically efficient.

Josep Huguet i Biosca

Minister of Innovation, Universities and Enterprise (2006-2010)
Minister of Trade, Tourism and Consumer Affairs (2004-2006)
President of the Josep Irla Foundation
@Josep_Huguet

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