Iberia sets up budget airline

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International Airlines Group, formed from the merger of Iberia and British Airways last year, said Thursday it had approved the creation of a new budget carrier to handle short- and medium-haul flights from Madrid.

The new airline, Iberia Express, will begin operations in mid-2012 and will offer business and economy seats "at competitive fares" from Madrid's Barajas airport, the company said in a statement.

"Iberia Express will have lower operating costs than Iberia's own loss-making short- and medium-haul business. The subsidiary will recruit new staff at market rates and have improved aircraft utilisation," it said.

Iberia faces stiff competition in Spain on these routes from low-cost rivals such as Ryanair and Easyjet which have expanded rapidly in the country in recent years.

Iberia Express will feed passengers onto Iberia's profitable long-haul routes, the International Airlines Group statement said.

The Iberia subsidiary will begin operations with a fleet of four Airbus A320 planes, rising to 13 planes by the end of 2012.

All the aircraft will be sourced from Iberia's existing fleet.

© 2011 AFP

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