Liberum says Iberia's deal with pilots positive for IAG

13th Feb 2014 15:53

Broker Liberum Capital has given the thumbs-up to a restructuring deal agreed between Spanish carrier Iberia, which is owned by International Airlines Group, and its pilots.Liberum said the agreement between Iberia and pilots' union SEPLA was positive and should end a series of industrial relations disputes that have hampered Iberia's turnaround.As well as a pay freeze until 2015, the deal includes productivity improvements such as longer flying hours for pilots and a new, lower entry-level salary of €35,500 per year.SEPLA has also agreed to an expansion of the fleet of low-cost, short-haul subsidiary Iberia Express from 14 to 25 aircraft.The pilots had originally opposed the creation of Iberia Express and had only agreed to it when arbitrators set a 14-aircraft limit on the size of the fleet.Liberum said the deal would reinforce confidence in Iberia's ability to contribute to IAG's €1.8bn 2015 operating profit target.The broker's analyst Gerald Khoo said: "Iberia could emerge with a cost base on a par with the best network carriers, which has arguably already been achieved at Iberia Express."Khoo kept his 'buy' recommendation on IAG with a 450p target price. The shares closed 2.9% up at 442p in London.PW