The president of Iberia explains corporate transformation at IESE New York

The president of Iberia explains corporate transformation at IESE New York



The president of Iberia, Luis Gallego, today gave a master class at the IESE in New York, where he explained the transformation undertaken by the airline six years ago, when he "lost a million a day", and his plans for the future, which go through achieve an operating margin of up to 15% by 2022.

"You can think that we started losing money due to the merger with British Airways, but no, we already knew how to lose money ourselves," quipped the executive of the Spanish company, which since the 2012 crisis has undertaken many changes.

As indicated, Iberia in 2017 had an operating profit of 376 million euros, 36% more than the previous year, and its goal between 2018 and 2022 is to reach an operating margin of 12% to 15%, well above 7, 7% achieved in 2017.

Before executing its "transformation plan" of 2013, which allowed it to reduce losses by 35% in half, Iberia faced difficulties due to the structure of the industry, legal restrictions in Spain or the complexity of the company itself, according to Gallego.

The airline, integrated into the IAG conglomerate, endeavored to reduce its capacity by 15%, cut routes, simplified the company and invested in mediation, marketing and reputation before developing in 2014 a "future plan" that is in its second phase and has resided, especially, in the "cultural change".

"We had to change the way we do things after 90 years" and communication was key, said Gallego, to transform from the very ranks of the organization to the experience on board, with the use of new technologies.

Part of this renewal is observed in the Iberia fleet, which currently has 39 wide, 66 narrow and 37 regional aircraft, to which will be added the new generation A350 models, of which 14 have been ordered, and A320Neo, of those who will receive 18, he said, establishing for the moment a "balance" between all.

The strongest market currently for Iberia is Latin America, where it has 18 destinations, while seeking to increase its presence in the United States, strengthen that of Asia, where it has 5 weekly flights to Tokyo, and resume those that were canceled in Africa, for example to Johannesburg.

Gallego, who said he had "traveled all his life in Economy", said that Iberia is also focused on punctuality and competes to make Madrid a more desirable "hub" for travelers with connection, who seek an "easy experience", and those of short distance, who decide by price.

Asked about the challenges for the future of Iberia brexit, Gallego recalled that the airline as its parent, IAG, are Spanish, and reiterated, as on other occasions, he does not think there will be problems.

"If there is a hard brexit there may be a problem, maybe you do not have an agreement with the UK to fly there, but I honestly do not think it will happen (…), I think there will be an agreement in the same way we have an agreement to fly to Canada, "he added.

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