Union General de Trabajadores (UGT), the trade union representing members of staff at Spanish airline Iberia, has rejected a final package of cuts aimed at bringing the ailing airline into a profitable position.

A spokesman from the Iberia press office in Spain told ShareCast that a meeting had been convened with ground staff and cabin crew at approximately 11:00 on Thursday, followed by a meeting with Iberia pilots at 13:00.

Both meetings lasted less than a couple of hours, he said, with workers turning down the package.

"They walked out and said they didn't want the package," the spokesman told ShareCast.

The union's rejection of restructuring proposals represents a potentially serious setback for the Spanish airline, which belongs to UK-listed International Airlines Group (AIG), and has been incurring losses for months.

In the six months to June 30th 2012, Iberia made an operating loss of €263m, working out at approximately €1.0m in operating losses per day.

In IAG's half-yearly results for the six months to June 30th, Willie Walsh, IAG Chief Executive Officer, commented: "There remains a stark difference in the performance of our subsidiaries. British Airways made an operating profit despite rising fuel process while Iberia's losses deepened."

"Iberia's problems are deep and structural and the economic environment reinforces the need for permanent structural change," he added at the time.

Last year, Iberia presented the union with a proposal for cutting up to 4,500 jobs and reducing pay for some staff by between 25 and 30%. Thursday's proposal represented a slimmed down cuts package with up to 3,147 jobs targeted to go and pay to be slashed by 11% for ground staff and 23% for cabin crew.

The company spokesman said Iberia is now waiting to find out what decision has been made by IAG, which was scheduled to convene for a board meeting today.

A spokeswoman at the IAG press office told ShareCast that a meeting of the board was taking place on Friday but declined to comment further.

IAG's share price was down 0.05% to 212.60p at 15:08 on Friday afternoon.

MF

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