To better compete with rivals easyJet and Ryanair, the board of Iberia is meeting this week to decide on the benefits of establishing a low-cost airline for its short- and medium-haul routes. Union members, specifically the Spanish pilots union Sepla, are worried the move could lead to the airline outsourcing many of its domestic functions, which could lead to strike action. However, Iberia, which posted an operating loss of €78 million for the first six months of 2011 to June 30, could have little option but to push ahead with the launch of a budget arm. Market analysts are speculating

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