Iberia (airline)

Early years

Iberia, Compañía Aérea de Transportes was incorporated on 28 June 1927 with a capital investment by the financier Horacio Echevarrieta and Deutsche Luft Hansa of 1.1 million pesetas. Flight operations started on 14 December 1927. Within a year, the company was sponsored by the Spanish government to provide postal transport between Madrid and Barcelona. During the dictatorship of Miguel Primo de Rivera, the aviation companies in Spain were combined and became state-controlled as a general interest public utility, coming into effect in early 1928. As a consequence, Iberia was merged into Compañía de Líneas Aéreas Subvencionadas S.A. (CLASSA) and ceased activities as an independent airline on 29 May 1929. The name "Iberia" continued to be registered by Director-General Daniel de Araoz y Aréjula. As the name "Iberia" was still registered, it was used when operations began in nationalist-held territory towards the end of the Spanish Civil War. Following the Civil War, Iberia became a purely domestic airline. At the end of the 1930s, the airline served the Seville–Larache–Cabo Juby–Las Palmas, Barcelona–Saragosa–Burgos–Salamanca–Seville–Tetuan and Palma–Barcelona–Vitoria runs using Junkers Ju-52 aircraft.

The airline was nationalised on 30 September 1944 and became part of Instituto Nacional de Industria. In 1946, Iberia was the first airline to fly between Europe and South America after World War II, using a Douglas DC-4 to operate flights between Madrid and Buenos Aires. By the Pact of Madrid in 1953, visa requirements were eliminated for US visitors to Spain. This stimulated the start of transatlantic flights between Spain and United States the following year. In addition, the amendments made in Montreal to the Convention on International Civil Aviation on 14 June 1954 were liberal to Spain, allowing mass tourism using charter aircraft. The airline phased in the first of three Super Constellations in June 1954. The aircraft was named Santa María to commemorate Columbus' first voyage.

From 1961 Iberia had a fleet of Douglas DC-8 four-engined long range jet airliners. The busiest route was Madrid to Buenos Aires. By 1965 a joint board of Iberia and Aviaco was set up to coordinate policies so that services did not conflict. In the early 1970s the company bought Douglas DC-9s, Boeing 727s, Douglas DC-10s and Boeing 747s as it expanded routes to Central America.

In the late 1980s/early 1990s Iberia planned a fleet renewal with the McDonnell Douglas MD-87, Airbus A320 and Airbus A340 replacing the Douglas DC-9, Boeing 727 and McDonnell Douglas DC-10 respectively. In June 1990, the carrier bought 16 Boeing 757s for US$1 billion, including spares and training; twelve more aircraft of the type were taken on option as a part of the deal.

In 1987 Iberia, together with Lufthansa, Air France and SAS Group, founded Amadeus, an IT company (also known as a Global Distribution System) that would enable travel agencies to sell the founders' and other airlines' products from a single system.

At the end of the '80s Iberia began to build up interests in other Spanish airlines - Aviaco, Viva Air, Binter Canarias and Binter Mediterráneo - and Latin American airlines Aerolíneas Argentinas, Viasa and Ladeco.

Development since the 1990s

In June 1990 the company led a consortium to buy an 85% stake in Aerolíneas Argentinas for an agreed $2billion and the following year bought a 45% stake in Viasa for $145million. In 1991 Iberia set up Europe's first international airline frequent-flyer programme, Iberia Plus, and, in 1996, the airline launched its website.

The company ordered 76 aircraft from Airbus in February 1998, which at the time was the largest single Airbus order. The following year it bought Aviaco and inherited that airline's fleet.

During 2001 Iberia was privatised and shares were listed on stock exchanges. By 2002, when Iberia celebrated its 75th anniversary, it had carried nearly 500 million people in its history. In July 2004, Iberia announced it had decided to move its Latin American hub from Miami, Florida to San Pedro Sula, Honduras.

On 5 February 2006, Terminal 4 at Madrid - Barajas Airport was turned over to Iberia and fellow Oneworld alliance members. This provided much-needed expansion capabilities for Iberia. Iberia represents around 60% of the airport's traffic. In 2005 the airline and its regional branch Air Nostrum transported 21,619,041 passengers via Madrid - Barajas Airport.

Iberia partially owns a low-cost carrier called Clickair, launched in November 2006.

On November 12, 2009, Iberia confirmed that it had reached a preliminary agreement to merge with British Airways. The merger between the two carriers would create the world's third-largest airline in terms of revenue. On April 25, 2010, it was confirmed that British Airways and Iberia had agreed to a merger, forming the International Airlines Group, although each airline would continue to operate under its current brand.

In November 2012 Iberia announced plans to reduce the number of employees by 4,500 and its fleet by five long-haul and 20 short-haul aircraft.

In 2012 Iberia established its own low-cost airline Iberia Express , which operates short- and medium-haul routes from its parent airline's Madrid hub, providing feeder flights onto Iberia's long-haul network. The airline began operating on 25 March 2012 and shares its head office with Iberia in Chamartín, Madrid.

Head office

The company head office is in the MV49 Business Park in Madrid.

Ownership

On 3 April 2001, Iberia was privatised and included in the IBEX-35 stock index of the Madrid stock exchange. The core shareholders were: Caja Madrid– 23.45%, British Airways 13.2%, SEPI– 5.20%, El Corte Inglés– 2.90%. British Airways raised its stake in Iberia by purchasing American Airlines' remaining shares, reportedly paying £13m for the small shareholding. This increased BA's total stake in Iberia to around 10% and preserved its two seats on the Iberia board.

In July 2008 British Airways and Iberia announced plans to merge, wherein each airline would retain its original brand. The agreement was confirmed in April 2010, and in July the European Commission and United States Department of Transportation permitted the merger and the two airlines began to co-ordinate transatlantic routes with American Airlines. On 6 October 2010 the alliance between British Airways, American Airlines and Iberia formally began operations. At the time it was estimated the alliance would generate an estimated £230 million in annual cost-saving for BA, in addition to the £330 million which would be saved by the merger with Iberia. The merger was finalised on 21 January 2011, resulting in the International Airlines Group (IAG), the world's third-largest airline in terms of annual revenue and the second-largest airline group in Europe.

Prior to merging, British Airways owned a 13.5% stake in Iberia, and thus received ownership of 55% of the combined International Airlines Group; Iberia's other shareholders received the remaining 45%.

The merger has been controversial. British Airways operates two funded principal defined benefit pension schemes in the UK. British Airways admits that one of the most serious financial risks it suffers is the challenging pension schemes' combined deficit. The last actuarial valuation was 3.7bn pounds, a value even greater than IAG's capitalisation. In addition and according to the "Pensions Act" for the year 2004, should it be necessary, the United Kingdom's Pension Regulator could force Iberia or IAG to give additional financial support to British Airways' retirement pension schemes. In its "Annual Report and Accounts Year ended 31 December 2011" BA declared that "negative movements in pension asset values and financial returns from these assets may increase the size of the pension deficit".

As of December 2013, the airline had over 18,000 employees.

Subsidiaries and alliances

Iberia has a 9.49% stake in low-cost carrier Vueling which is based near Barcelona, with parent company IAG owning the remaining 90.51%. This was done to ensure that IAG does not have 100% of the shares in Vueling, but that the shares are split between its divisions. Iberia also has a 0.95% share in Royal Air Maroc.

Iberia is allied with American Airlines, Qantas, Avianca, British Airways, and Grupo TACA, and on 1 September 1999, the company joined the Oneworld alliance.

Iberia formerly owned Aviaco, which operated most domestic routes. It was founded on 18 February 1948 and operated until 1 September 1999. Iberia also owned Binter Canarias, until the Spanish government began the privatisation of the subsidiary. Hesperia Inversiones Aéreas bought the airline from Iberia in July 2002. A second airline using the Binter name, Binter Mediterraneo, was formed as a subsidiary of Iberia in 1988 with routes from Melilla to Málaga, Almeria, Valencia and in its last year, with Madrid. The airline was acquired by Air Nostrum in 1998 and merged into its operations.

Iberia was a founding partner in the computerised air ticket reservation system, Amadeus, with an 18.28% stake – this was sold in 2005. Iberia is also active as a tour operator through its Viva Tours and Tiempo Libre units, and with Cacesa, it supplies parcel shipment services.

In addition, Iberia is an aircraft maintenance company, servicing its fleet and those of another 48 companies, including some leading European airlines. Iberia is a supplier of aircraft handling services at all Spanish airports; its airline clients number more than 200.

Codeshare agreements

Iberia codeshares with the following airlines:

Current fleet

Iberia operates an all-Airbus fleet. As of January 2017 the airline's fleet consists of the following aircraft:

Fleet development

Over the years, Iberia operated the following aircraft types:

Aircraft cabins

All of aircraft in the fleet are configured in a two class layout with Business and Economy cabins. Iberia currently markets three distinct business class variations, depending on flight length. In March 2009 Iberia announced that during the course of 2009–2011 it would renovate its economy class on all its planes as well as designing a new business class for its long haul planes. Iberia was one of the last remaining major airlines to equip all of its intercontinental routes with personal entertainment screens. As of 2016, now the Airbus A330-200 and -300 and A340-600 fleets are equipped with the personal IFE. In-flight catering is provided by Gate Gourmet.

Business Class is available on Spanish domestic and inter-European flights. Seats are exactly the same as in the economy cabin, but with the middle (B and E) seats blocked off. Business Class tickets also include improved ground service (priority check-in, security, boarding, baggage handling, and lounge access.)

Business Club is a mid-haul product available on flights to select destinations in Egypt, Equatorial Guinea, Israel, Nigeria, and Russia. Unlike on short-haul service, Business Club seats are located in a dedicated cabin, are physically wider, have a greater seat pitch, and are equipped with leg-rests and in-seat video on demand.

Business Plus is offered on long-haul flights to the Americas and Southern Africa. Business Plus offers lie-flat seating and international business class amenities.

Iberia has moved more to an American, or "a-la carte" model for domestic and European flights, offering a buy on board service called "Tu Menú" in economy for meals, snacks and beverages. Mid-haul flights to Athens, Cairo, Dakar, Istanbul, Malabo, Moscow, and Tel Aviv as well as long-haul intercontinental flights are fully catered in Economy with the exception of alcohol.

Accidents and incidents

As of January 2016, a total of 37 aircraft operated by or for Iberia have been written off in accidents and a shoot-down since 1939. Several Iberia aircraft have also been hijacked. These incidents and accidents include the following: