International Airlines Group loses senior executive after union conflict

Willie Walsh, boss of the merged British Airways and Iberia, lost one of his senior executives on Wednesday when the head of the Spanish airline stepped down after months of conflict with unions over layoffs.

Rafael Sánchez-Lozano, who had led the airline since 2009, and International Airlines Group (IAG) decided "by mutual agreement" that he would give up his duties as Iberia chief executive and as a board member of the parent group immediately, the company said. It gave no reason for the departure of one of the company's key figures.

Walsh has replaced him with one of the people most hated by the company's workforce, Luis Gallego, the chief executive of budget carrier Iberia Express, which is the major source of tension with the company's workers.

Unions had threatened to hold a total of 15 strike days in February and March, blaming Walsh directly for the company's apparent inability to negotiate. Strikers carried anti-British placards, claiming Spanish interests had been ignored in the merger.

Clashes with police at Madrid's Barajas airport in February set the tone of a bruising confrontation that will be difficult to heal, despite a recent compromise deal cutting 3,100 jobs.

Spain's transport minister, Ana Pastor, had pushed for the deal with unions after warning that the strikes would cause damages of €10m (£8.4m) a day to the recession-struck economy.

Iberia had wanted to sack 3,800 of its 18,000 employees and cut 15% of capacity, including on long-haul routes to Latin America. It had said it needed to "take drastic measures to reduce costs and improve unit revenues in order to remain in business".

Walsh said Sánchez-Lozano had "led the airline through a very difficult period in the midst of a deep recession and completed the first important step towards returning the airline to profitability".

He added: "Luis Gallego has extensive experience across a range of international airlines. He was instrumental as chief executive of Iberia Express in creating an airline that is a great success."

Sánchez-Lozano said: "After reaching agreement with the mediator and the majority of our unions, we have achieved an important milestone as we restructure the airline. The company is now entering a new phase and it is time for me to pass on the baton to my successor."

Iberia's bad performance last year drove IAG, which also owns BA, into the red with pretax losses reaching €1bn.

Its operating loss was €351m (£304m) and its struggling performance registered in a €343m writedown that reflected how far its value has fallen since its merger with BA in 2011.

The merger created an airline with 61.5 million passengers flying to 205 destinations worldwide.