Iberia Group - History

History

Iberia, Compañía Aérea de Transportes was incorporated on 28 June 1927 with a capital investment by the financier Horacio Echeberrieta and Deutsche Luft Hansa of 1.1 million pesetas. Flight operations started on 14 December 1927. Within a year, the company was sponsored by the Spanish government to provide postal transport between Madrid and Barcelona. During the dictatorship of Miguel Primo de Rivera, the aviation companies in Spain were combined and became state-controlled as a general interest public utility, coming into effect in early 1928. As a consequence, Iberia was merged into Compañía de Líneas Aéreas Subvencionadas S.A. (C.L.A.S.S.A.) and ceased activities on 29 May 1929. The name "Iberia" continued to be registered by Director-General Daniel de Araoz y Aréjula. As the name "Iberia" was still registered, it was used when operations began in nationalist-held territory towards the end of the Spanish Civil War. Following the Civil War, it became a purely domestic airline.

The airline was nationalised on 30 September 1944 and became part of INI. In 1946, it was the first airline to fly between Europe and South America after WWII, using a Douglas DC-4 flying from Madrid to Buenos Aires. By the Pact of Madrid in 1953, visa requirements were eliminated for US visitors to Spain. This stimulated the start of transatlantic flights between Spain and United States the following year. In addition, the amendments made in Montreal to the Convention on International Civil Aviation on 14 June 1954 were liberal to Spain, allowing mass tourism using charter planes.

By the time of its 50th anniversary in 1981, the Boeing 747 airline carried over 10 million passengers in a year for the first time. In the late 1980s/early 1990s, Iberia also began to build up interests in other Spanish airlines – Aviaco, Viva Air, Binter Canarias and Binter Mediterraneo and Latin American airlines – Aerolíneas Argentinas, Viasa and Ladeco..

In 1987 Iberia together with Lufthansa, Air France and SAS founded Amadeus, an IT company (also known as a GDS) that would enable travel agencies to sell the founders and other airlines' products from a single system.

During 2001 Iberia was privatised and shares were listed on stock exchanges. By 2002, when Iberia celebrated its 75th anniversary, nearly 500 million people had flown with them.

On 5 February 2006 the new Terminal 4 at Madrid Barajas was given over to Iberia and the Oneworld alliance members. This provided much-needed expansion capabilities for Iberia. Iberia is responsible for around 60% of the airport's traffic. In 2005 the airline and its regional branch Air Nostrum transported 21,619,041 passengers to/from Barajas.

In 2009, Iberia reached an agreement to merge with European rival British Airways. This merger was completed by April 2010, creating the International Airlines Group. The newly formed company consisted of British Airways and Iberia as well as their respective subsidiaries and has its main hubs at London Heathrow Airport and Madrid Barajas Airport as well as smaller hubs at Gatwick Airport and Barcelona El-Prat Airport. However, the Merge between both companies is somehow controversial. British Airways operates two funded principal defined benefit pension schemes in the UK. BA admits that one of the most serious financial risks it suffers is the challenging pension schemes combined deficit. The last actuarial valuation was 3.7bn pounds, value even greater than IAG capitalization. In addition and according to the "Pensions Act" for the year 2004, should it be necessary, UK's Pension Regulator could force Iberia or IAG to give additional financial support to BA's retirement pension schemes. In its last "Annual Report and Accounts Year ended 31 December 2011" BA declares that "negative movements in pension asset values and financial returns from these assets may increase the size of the pension deficit". This is the reason why IAG is currently under dividend restrictions which are expected to be partly dependent on the UK pension regulator´s agreement.