LONDON (AP) -- International Airlines Group on Friday warned that its Spanish carrier Iberia was "in a fight for survival" and unveiled a restructuring plan to cut 4,500 jobs as it reported a drop in third-quarter profit.
Iberia CEO Rafael Sanchez-Lozano said the carrier is losing money in all its markets and was "burning €1.7 million ($2.17 million) every day."
"Iberia has to modernize and adapt to the new competitive environment as its cost base is significantly higher than its main competitors in Spain and Latin America."
IAG has given its unions a Jan. 31 deadline to reach agreement on the job cuts. If one hasn't been reached by then, the company warned said there will be deeper cuts and a more radical reduction in Iberia's operations. The proposed job cuts would shrink Iberia's payroll from 20,000 to 15,500, the company said.
The airline will reduce its capacity by 15 percent, suspend non-profitable routes and shed 25 aircraft.
In a statement published through Spain's stock market regulator CNMV, IAG said Friday that "Iberia will reduce salaries and improve productivity in its short- and medium-haul mainline operations" by implementing salaries and productivity levels for pilots and cabin crew as low cost carrier benchmarks.
IAG shares were up half a percent at 168.8 pence in early trading in London.
For the three months to Sept. 30, IAG reported a net profit of €237 million ($302 million), down 11 percent from €267 million a year earlier. Revenue was up 11 percent but expenditure on operations increased by 14 percent.
Iberia's nine-month operating loss of €262 million ate up most of the €286 million profit from British Airways, IAG said.
IAG announced Thursday that it was bidding to take over Spanish low-cost airline Vueling, in which Iberia already had a 46 percent stake. Analysts say buying Vueling could be a quicker way for IAG to combat competition in Spain's low-cost sector than growing its own instead of trying to grow its own subsidiary .
Harold Heckle in Madrid contributed to this report.