Iberia (airline)
Iberia, legally incorporated as Iberia Líneas Aéreas de España, S.A. Operadora, Sociedad Unipersonal, is the flag carrier of Spain. Founded in 1927 and based in Madrid, it operates an international network of services from its main base of Madrid–Barajas Airport.
Iberia, with Iberia Regional and with Iberia Express, is a part of International Airlines Group. In addition to transporting passengers and freight, Iberia Group carries out related activities, such as aircraft maintenance, handling in airports, IT systems and in-flight catering. Iberia Group airlines fly to over 109 destinations in 39 countries, and a further 90 destinations through code-sharing agreements with other airlines.
On 8 April 2010, it was confirmed that British Airways and Iberia had signed an agreement to merge, making the combined operation the third largest commercial airline in the world by revenue. Shareholders of both carriers approved the deal on 29 November 2010. The newly merged company, known as International Airlines Group, was established in January 2011, although both airlines continue to operate under their respective brands.
History
Early years
Iberia, Compañía Aérea de Transportes, was incorporated on 28 June 1927 with a capital investment of 1.1 million pesetas by financier Horacio Echevarrieta and Deutsche Luft Hansa. Flight operations commenced on 14 December 1927. The Spanish government contracted the company to provide postal transport between Madrid and Barcelona. During Miguel Primo de Rivera's dictatorship, Spanish aviation companies were amalgamated and became state-controlled as a general interest public utility, starting early 1928. Consequently, Iberia was merged into CLASSA, ceasing independent operations on 29 May 1929. Although the airline had neither a fleet nor commercial operations under its brand, the name 'Iberia' remained registered.In 1937, during the Spanish Civil War, Spanish navy captain and director-general of the company Daniel de Araoz y Aréjula received the order from General Alfredo Kindelán to organize an airline for the air transport in nationalist-held territory during the war. Daniel de Araoz y Aréjula traveled to Germany to get support and material for the restoration of the company as an independent airline, thus six Junkers Ju 52 from Deutsche Luft Hansa arrived, which were acquired by Iberia at the end of the conflict, in addition to material to help the operations. As the name "Iberia" was still registered, it was used when operations began in 1937 towards the end of the war. During the conflict Iberia was a purely domestic airline, with headquarters in Salamanca the airline operated flights to cities in the nationalist side, Spanish North Africa, Spanish West Africa and Morocco. After the war, at the end of the 1930s, the airline served the Seville–Larache–Cape Juby–Las Palmas, Barcelona–Zaragoza–Burgos–Salamanca–Seville–Tetuan and La Palma–Barcelona–Vitoria runs using Junkers Ju 52 aircraft. On 1 May 1939, Iberia operated its first regular service to an international destination as an independent civil airline with a Madrid–Lisbon flight.
In 1940, the government gave the monopoly of national air transport to Iberia, This privilege helped the company to start building as an important international airline, which had not been until then. The airline was nationalised on 30 September 1944 and became part of Instituto Nacional de Industria. The policy of the company was to separate itself from the German orbit to which it had been linked in its first years and establish relations with the United States in terms of aircraft purchase and supplies of aeronautical material for the operation. Thus, that year the purchase of seven DC-3 and three DC-4 was finalised, to expand the network in Europe and accomplish the company's first transatlantic flight. This was achieved 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. This flight was the first of an expansion of flights between Latin America and Europe through Spain carried out by the company, with destinations such as San Juan de Puerto Rico, Caracas, Ciudad de México and La Habana. The poor diplomatic relations of the Francoist regime delayed the establishment of some destinations until the beginning of the 1950s.
Iberia incorporated four more DC-4s into its fleet during the first half of 1950, enabling both the strengthening of current services and the launch of new ones. With 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 the United States the following year. The airline phased in the first of three Super Constellations in June 1954. The aircraft was named Santa María to commemorate Columbus' first voyage and was deployed in the inauguration of the new Madrid–New York service two months later, on 3 August 1954, the same day that Columbus left the port of Palos de la Frontera. The amendments to Article 6 of the Convention on International Civil Aviation of 14 June 1954 made in Paris on 30 June 1956 about non-scheduled air services enabled mass tourism using chartered aircraft since allowing European member states to carry out this type of operation with international flights between their territories. This favoured the airline given that it had in its territory several highly sought after destinations, mainly those on the eastern and southern Mediterranean coast and in the Balearic and Canary Islands, highly demanded by seaside tourism which began with this type of operation.
In 1959, the Spanish airline Aviaco became a part of Iberia by controlling two-thirds of its capital in a capital increase. Aviaco had been created in 1948, after the national air traffic had been liberalised for Spanish private companies in 1946.
In 1961, Iberia had 9 Super Constellations in the fleet, that year came into service the first DC-8-50, the four-engined jet airliner was progressively incorporated until reaching the number of 8 aircraft of the 50 series variant. Iberia was gradually incorporating jets of short and middle range, such as Sud Aviation Caravelle, and Douglas DC-9. The Super Constellations were removed and sold in 1966, and two years later, three DC-8-63 with more seat capacity were incorporated into the fleet. By 1969, the long-range fleet of Iberia was composed of 11 DC-8s. In the early 1970s, the jumbo jets Boeing 747s and Douglas DC-10s came to the company during an expansion of the intercontinental routes, especially to Central America. By the middle of this decade, the airline flew to almost all Latin American capitals. With the expansion in Latin America the company had followed a policy of purchasing shares and establishing agreements with several Latin American airlines such as Compañia Dominicana de Aviación, Aérolíneas Peruanas, PLUNA and Air Panamá Internacional. At first, the intention of this policy could be to create a strong distribution network for intercontinental routes passengers, but as the airline was controlled by the state the Franco regime used this investment policy to get support in Latin America. Iberia gave material, capital and logistical support to those flag-carrier airlines. By 1971, these investments resulted in the loss of 14 million dollars. Iberia also bought the short-middle range trijet Boeing 727-200 in 1971, of which the company had 35 aircraft and was used until 2001 like the other short-range jet bought by the company in the late '60s, the Douglas DC-9.
In 1987, Iberia, together with Lufthansa, Air France and SAS Group, founded Amadeus, an IT company that would enable travel agencies to sell the founders and other airlines' products from a single system. In the same year, Iberia planned a fleet renewal in the middle-range fleet with the McDonnell Douglas MD-87 and Airbus A320 replacing the Douglas DC-9 and Boeing 727 respectively. In June 1990, the carrier bought 16 Boeing 757s for billion, including spares and training; twelve more aircraft of the type were taken on option as a part of the deal.
Development since the 1990s
In the 1990s, Iberia followed a policy of buying shares of Latin American flag carriers. It intended to dominate the entire Latin American market and become one of the largest airlines on the worldwide scene.The investments started in June 1990 with the buying of a 30% stake in Aerolíneas Argentinas. In 1991, Iberia bought a 45% stake in Viasa for $81 million and a 35% stake in Chilean Ladeco. The airline continued making progress in setting up Europe's first international airline frequent-flyer programme in 1991, with the creation of Iberia Plus.
In 1994, the poor results of Aerolineas Argentinas, which presented a positive balance in its commercial exploitation but hid a significant deficit with losses in non-operating activities, led Iberia to increase its ownership participation to 85%. With this increase in participation, the Argentine state renounced its "golden share", allowing Iberia to have full fiscal control of the company. Iberia began a reduction in the size of the company, a liquidation of the national and overseas offices, and the technical sale of its entire fleet composed of 28 aircraft in a "sale and lease back" operation. Argentine sources indicate that the purchase capital of Aerolíneas Argentinas was charged to its financial liability. This, together with the aforementioned sales, generated a big controversy, giving rise to criticism of the Argentine government for the privatisation of the company. The truth is that during the period that Aerolíneas Argentinas was owned by Iberia, the Spanish airline allocated more than 1,200 million dollars to the Argentine flag carrier and kept the airline operating despite the poor results. Meanwhile, the Argentine government refused to invest more capital and expressed its desire to get rid of a large part of its shares. Iberia carried out major reforms in the structure of the company, which by that date was outdated with, among other things, extortionate personnel costs. Some of these changes included the development of a free booking program, the complete computerisation of the management system, the introduction of business class on domestic flights, and the creation of a new hub in Ezeiza International Airport for long range regional flights to Latin American destinations. In 1995, before the process of privatisation of Iberia, Aerolineas Argentinas was transferred to the Spanish government through INI, which would later become SEPI. In 2001, the Argentine flag carrier was sold to the Spanish company Grupo Marsans.
In 2008, the president of Argentina Cristina Fernández de Kirchner expropriated the company from Grupo Marsans for the symbolic price of 1 Argentine peso and renationalised the airline. In July 2017, the ICSID ordered Argentina to pay 320 million dollars to Grupo Marsans for having paid a lower price than the real value of the company. On 7 April 2010, the president of the Spanish Court of Auditors presented at the Spanish Parliament the figures of the investment in Aerolíneas Argentinas between 1990 and 2001, which was estimated at €2,100 million.
The plans to make the Iberia group the dominant airline in the Latin American market also failed in Venezuela. In 1997, the board of directors of Viasa, in which Iberia was the majority, decided to suspend the flights of the company, arguing that the situation was unfeasible. Iberia announcing that the company was not going to continue providing more capital into Viasa if its local partner, the Venezuelan state-owned group FIV, was not going to do the same. By then Iberia had invested more than 250 million dollars in the Venezuelan flag carrier without having any profit. In February 1997, the agreement for the liquidation of Viasa that accumulated a 200 million dollar debt, with a capital of only 2 million dollars, was announced. Iberia and the Venezuelan government had the intention of liquidating the company to avoid bankruptcy. Iberia offered to write off the 150 million dollar debt that Viasa had accumulated to the Spanish carrier in exchange for keeping its fleet of four DC-10s and five Boeing 727s. The agreement included compensation for the staff after the liquidation, which had a cost of 20 million dollars.
Regarding Ladeco, Iberia was a minority shareholder and did not intervene in its management. Initially, Iberia had the intention of achieving the merger of Ladeco with LAN Chile, but Chilean antitrust laws prevented it. Later, in 1995, LAN Chile made a major acquisition of Ladeco shares and acquired 57.6% of the company, this operation was approved by the Chilean antitrust prosecution, and then began a merger process in which Iberia lost some rights acquired during its time as shareholder of Ladeco. In 1997, Iberia sold its shares in Ladeco.
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.
By the end of the '90s, Iberia owned as majority shareholder the Spanish airlines Aviaco, Viva Air, Binter Canarias and Binter Mediterraneo, and Latin American airlines Aerolíneas Argentinas, Austral, Viasa and Ladeco.
During 2001, Iberia was privatised and its 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.
In November 2006, Iberia launched Clickair, a low-cost carrier subsidiary. Clickair merged with Vueling in 2009.
On 12 November 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 8 April 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 another 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. In 2013, the headquarters of both airlines were moved to a new office in Ciudad Lineal, Madrid, and the corporate images have been changed as part of the renewal process.
In 2023, Iberia announced its return to Tokyo's Narita International Airport in October 2024 following its withdrawal in 2020 during the COVID-19 pandemic. Iberia first started flights to Tokyo in 1986, and began nonstop flying in 1992, but had previously suspended flights between 1998 and 2016.