Iberia is cutting its 156-strong fleet by 25 aircraft, and reducing 15% of its network capacity, with the airline focusing on the most profitable routes.
The plan aims to stem Iberia’s cash losses by mid-2013, and raise profits by at least 600m euros ($766m; £479m).
IAG also revealed a 30% drop in pre-tax quarterly profits to 221m euros.
The drop was due to the poor performance at Iberia and at the recently-purchased UK regional airline BMI, as well as rising fuel, operating and engineering costs.
“The group performance is coming back to the levels seen in 2011 and this is particularly true if you strip out the BMI losses of 31m euros in the quarter,” said IAG chief executive Willie Walsh.
“However, there remains a strong difference between the performances of British Airways and Iberia.”
The parent company said it now expected to make an overall operating loss of 120m euros for the year – excluding any costs associated with the Iberia restructuring – with further losses likely in the remaining three months due to the impact of storm Sandy in the US.
Its pre-tax losses for the first nine months of the year have now reached 169m euros, compared with a 355m-euro profit in the same period last year.
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