LONDON (ShareCast) - International Consolidated Airline Group (IAG) said the first flight of its new low cost airline, Iberia Express, will take off on March 25. IAG president Antonio Vazquez spoke at the New Economic Forum held in Madrid and explained that the new low cost airline was necessary to face oncoming competition from a new low cost high-speed railway system. Iberia (Madrid: IBLA.MC - news) continues to negotiate with its pilots while deciding future steps to prevent 2012 from becoming one of its worst years. "We should develop long-haul, consolidate short and medium-haul, and strengthen the Madrid hub," Vazquez said. The current year is expected to be difficult in terms of the economic cycle and fuel costs that have gone from 13% to a third of Iberia's total costs. Iberia does not want to lose its brand image and wants to become a global reference within five years. As such, it continues to work on alliances and remains open to new businesses as long as a good target is found. The purchase of BMI is in the works. "The creation of Iberia Express is part of the solution but much more must be done," said Vazquez. Vazquez believes that the pilot strike is not sustainable nor negotiable and hopes that the privatisation of airport operator AENA is more than a short-term solution. "We need an airport that is cost-effective and functions well. If the aim of the privatization is just to raise revenue, higher airport fees must be prevented as to not hinder competition." Shares of IAG are up 1.98% to €2.056. S.B.