Flash again about 15 years, and Iberia was a joke. It was busy flying a fleet of gas-guzzling four-engine widebodies together with some Airbus narrowbodies and loads of turboprops from its Madrid and Barcelona hubs as extremely low price carriers simply got here and took share. The airline’s prices had been excessive, and it was shedding cash. However now? Iberia is a rock star, and it has large plans over the subsequent a number of years.
In a latest investor day, Iberia confirmed simply how dramatic the turnaround had been.
This isn’t a one-off good yr. This can be a long-standing strategic effort by mum or dad firm IAG to make Iberia a functioning member of the group, and never simply as a semi-useful secondary instrument behind British Airways.
IAG made a number of strategic modifications which helped place Iberia nicely, some which may appear counterintuitive. For instance, IAG purchased Vueling, the low price operator with a Barcelona base. How does that assist Iberia? It allowed the airline to cease specializing in a dual-hub technique and as an alternative pour all of its efforts into Madrid. Barcelona is a greater match for a low-cost provider with its massive tourism market. Madrid is extra well-rounded as a hub with deep enterprise and household ties to Latin America. It’s extra suited to a community provider.
That very same yr noticed the controversial introduction of Iberia Specific. This isn’t a regional airline. Iberia Specific is only a lower-cost platform that flies narrowbodies for cheaper than common Iberia. (No person would ever get away with this technique within the US.) It was a part of IAG’s efforts to get price out of Iberia, and whereas labor could not have appreciated it, it has helped the airline develop by contributing to lowered non-fuel unit prices of 5.72 euro cents in 2024, down from 6.01 euro cents in 2012.
Not all cost-cutting efforts had been controversial. Simply take a look at how the long-haul fleet has developed. Going from a fleet of A340s powered by hair dryers to an environment friendly twin-engine operation has carried out wonders for the airline’s economics. It has additionally created a lot better functionality to serve quite a lot of various kinds of markets.
Iberia Lengthy-Haul Departures by Plane Kind
Knowledge through Cirium, Lengthy-Haul contains Widebody departures > 2,000 miles and A321XLR departures > 3,000 miles
However maybe the most important achievement at Iberia has been the power to show Madrid into a real powerhouse of a hub. Importantly, it’s one of many few airports in Europe that truly has room and political curiosity in development. This makes it extremely priceless. This hub features as a key Transatlantic operation, however not like many others on the continent, Iberia’s greatest alternative is over the water to South America. Right here’s how the airline has divided its longer haul flying:
Iberia Lengthy-Haul Departures from Madrid by Geography
Knowledge through Cirium, contains Widebody departures > 2,000 miles and A321XLR departures > 3,000 miles
Because the pandemic, Iberia has completely turned on the fuel on its Latin American community. Simply take a look at that development. The US has appear some development as nicely, primarily in increase service to companion American’s hubs in addition to introducing the A321XLR on thinner routes. However South America is the star of the present.
Once we take a look at South America, there are actually two markets. There’s Brazil with its ties to Portugal after which there’s all the things else with ties to Spain. Brazil is big and is just barely smaller than all the remainder put collectively. That’s TAP’s market to combat out with the Brazilian carriers, although Iberia has a decent and rising presence. However for the remainder of the continent, Iberia shouldn’t be messing round.
Europe – South America (ex-Brazil) Seats by Airline
Knowledge through Cirium
Within the final 20 years, this market has greater than doubled in measurement. Normally, the European carriers have been shedding share as LATAM and Avianca have grown. Air Europa is the exception, and naturally, IAG tried to purchase Air Europa but it surely couldn’t be pushed by means of primarily based on competitors grounds. However within the meantime, Iberia has been greater than conserving tempo. Pre-pandemic, Iberia had about 24 p.c of seats, however now that’s at 27 p.c and rising.
That won’t sound like loads, however in a quickly rising market, that’s important. Iberia is now as much as 19 locations in Latin America with Recife becoming a member of in December adopted by Fortaleza in January. Each of these are operated by the A321XLR. Vacation spot quantity twenty will probably be Monterrey in México.
Within the US market, Iberia lengthy served Chicago/O’Hare, Miami, and New York/JFK (together with San Juan), however different markets have come out and in. Boston and LA had been the primary to hitch the membership in 2018 after they each begin flying year-round often. Dallas/Fort Value was added in 2022 because of the ever-growing partnership with American. San Francisco is summer-seasonal. Now Washington/Dulles goes year-round this winter for the primary time because of the A321XLR with the ability to function throughout off-peak instances.
There’s extra coming. This winter, Iberia will fly that airplane to Orlando for the primary time. Subsequent summer season, it should additionally add American hub-Philadelphia and can make its first foray into Canada in latest reminiscence with Toronto. If this development sounds stable, you haven’t seen something but. As we speak Iberia has 45 long-haul airplanes. It’ll develop that to 70 in a couple of quick years as a part of its 2030 plan.
On short-haul, that is additionally a remarkably completely different airline than it as soon as was. It has expanded its attain additional into cities alongside the Mediterranean to assist construct connectivity, however extra importantly, it has fully become a real hub-and-spoke airline. Simply take a look at this short-haul map zoomed into Spain for July 2025 in comparison with July 2005.
Maps through Cirium
Iberia was shedding some huge cash flying routes it simply felt it needed to fly. Now it’s targeted on Madrid and the locations the place it may possibly earn money as a community airline. You may learn extra about why Madrid is such a giant win for the airline in its latest investor day deck.
With all of this cash flowing in, Iberia goes to be hiring, refreshing cabins and lounges, and constructing a brand new headquarters. That is an airline that’s going all-in, and it expects an working margin of 13.5 to fifteen p.c whereas it does all this. There’s no motive to assume that it may possibly’t make that occur, and that’s one thing you by no means would have heard me say even a decade in the past.
