Air Nostrum To Cut Flights, Jobs

Spain's Air Nostrum, which owns the franchise to fly many of Iberia's domestic routes, will cut 18 percent of its flights and could lay off almost 600 workers after a sharp fall in traffic in the first quarter.

Air Nostrum, which is 76 percent owned by privately owned group Nefinsa and also by savings bank Caja Duero, said first-quarter passenger numbers had fallen 9 percent year on year and business tickets by 30 percent, leading to a 16 percent fall in revenues.

"Our forecasts for 2009 were outdated, and because of that preventative measures were undertaken to contain spending. However, figures for February and especially March confirmed the picture is infinitely worse than expected," chief executive Carlos Bertomeu said in a statement.

The adoption of the action plan could affect 589 people, the statement added. The company employs 2,250.

Air Nostrum is wholly exposed to a domestic market from which Iberia is retreating during an economic crisis that has put a further 1.3 million Spaniards out of work in the past 12 months.

Spanish passenger traffic in March plunged 18.9 percent year on year, figures from airports operator AENA show.

Air Nostrum will reduce its fleet by 10 planes -- to around 60 planes, according to figures from Iberia -- and reduce to one from two the number of cabin crew flying 50-seater aircraft.

An official with union UGT, who asked not to be named, said the company was not within its rights to begin redundancy proceedings under Spanish law.

"We are waiting for the reasons behind this action since the law says the company must have been loss making for the previous three years, and this is not the case with Air Nostrum," he said.

The UGT union represents around 30 percent of the airline's ground staff and 90 percent of the air crew, excluding pilots.