IAG plans to replace European flights with Vueling services

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LONDON (ShareCast) - Low-cost airline Vueling is reportedly set to take over many of the European flights operated by British Airways and Iberia.

International Airlines Group (IAG), which was formed through the merger of British Airways and Iberia in 2011, plans to cut costs by using Vueling for short-haul services in Europe, sources told the Financial Times.

IAG owns a 46% stake in Vueling via Iberia and in November (Xetra: A0Z24E - news) made a bid to buy the remaining shares of the company as it grows profitably.

Iberia is said to be preparing for strikes as it attempts to reach a deal with unions over proposed restructuring of the Spanish airline.

Should Vueling replace some flights of Iberia and British Airways, IAG could face further uproar from unions at the carrier.

IAG sources said the transaction would improve its stance against low-cost carriers EasyJet (Other OTC: ESYJY - news) and Ryanair.

It would also help slash expenses as Vueling wages and benefits are lower than at British Airways and Iberia.

No final decisions have been taken and IAG declined to comment.

IAG shares were down 0.67% to 221.50p at 09:54 Monday.

RD