Mediaboss Marketing

Associated Press

MADRID Spanish carrier Iberia on Friday launched a new low-cost airline, Iberia Express, which aims to claim a stake in the highly competitive no-frills sector of the European market.

The new airline is part of a plan by parent company International Consolidated Airlines Group to increase profitability after the merger of its component parts, British Airways and Iberia.

Iberia Express will initially cover Vigo, Santiago and Granada on Spain's mainland and its island destinations of Minorca, Ibiza, Fuerteventura, Lanzarote and La Palma. It will expand internationally to Ireland, Italy, Greece, Latvia and Netherlands, chief executive Luis Gallego said at a news conference.

"The containment of costs will allow Iberia Express to grow and compete with the low-cost operators," said Gallego, adding that although the new airline will be managed independently, it will employ Iberia's maintenance and other services.

Inaugural flights will take off Sunday, although the company's website was not up and running Friday afternoon. Prices begin at (euro) 25 ($33) one-way with a surcharge for checking in luggage and booking seats in advance.

The new company employs 500 staff and has a fleet of four Airbus 320 planes, although there are plans to increase this to 14 aircraft by the end of the year and up 40 by 2015.

The airline is the subject of a protracted labor dispute between Iberia Lineas Aereas de Espana SA and Spain's main pilots' union, Sepla which held 12 days of work stoppages in December and January to protest the low-cost airline.

Sepla pilots argue Iberia Express would mean job losses among the 1,600 pilots who work for the main airline a claim disputed by Iberia.

Sepla had announced nine days of strikes in April and May but called them off following government mediation and has agreed to negotiate further with Iberia.

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Spain's Iberia starts low-cost airline