Flash back about 15 years, and Iberia was a joke. It was busy flying a fleet of gas-guzzling four-engine widebodies along with some Airbus narrowbodies and a lot of turboprops from its Madrid and Barcelona hubs as ultra low cost carriers easily came and took share. The airline’s costs were high, and it was losing money. But now? Iberia is a rock star, and it has big plans over the next several years.

In a recent investor day, Iberia showed just how dramatic the turnaround had been.

This is not a one-off good year. This is a long-standing strategic effort by parent company IAG to make Iberia a functioning member of the group, and not just as a semi-useful secondary instrument behind British Airways.

IAG made several strategic changes which helped position Iberia well, some that might seem counterintuitive. For example, IAG bought Vueling, the low cost operator with a Barcelona base. How does that help Iberia? It allowed the airline to stop focusing on a dual-hub strategy and instead pour all of its efforts into Madrid. Barcelona is a better fit for a low-cost carrier with its large tourism market. Madrid is more well-rounded as a hub with deep business and family ties to Latin America. It’s more suited to a network carrier.

That same year saw the controversial introduction of Iberia Express. This is not a regional airline. Iberia Express is just a lower-cost platform that flies narrowbodies for cheaper than regular Iberia. (Nobody would ever get away with this strategy in the US.) It was part of IAG’s efforts to get cost out of Iberia, and while labor may not have liked it, it has helped the airline grow by contributing to reduced non-fuel unit costs of 5.72 euro cents in 2024, down from 6.01 euro cents in 2012.

Not all cost-cutting efforts were controversial. Just look at how the long-haul fleet has evolved. Going from a fleet of A340s powered by hair dryers to an efficient twin-engine operation has done wonders for the airline’s economics. It has also created much greater capability to serve a variety of different types of markets.

Iberia Long-Haul Departures by Aircraft Type

^{Data via Cirium, Long-Haul includes Widebody departures > 2,000 miles and A321XLR departures > 3,000 miles}

But perhaps the biggest achievement at Iberia has been the ability to turn Madrid into a true powerhouse of a hub. Importantly, it’s one of the few airports in Europe that actually has room and political interest in growth. This makes it incredibly valuable. This hub functions as a key Transatlantic operation, but unlike many others on the continent, Iberia’s best opportunity is over the water to South America. Here’s how the airline has divided its longer haul flying:

Iberia Long-Haul Departures from Madrid by Geography

^{Data via Cirium, includes Widebody departures > 2,000 miles and A321XLR departures > 3,000 miles}

Since the pandemic, Iberia has absolutely turned on the gas on its Latin American network. Just look at that growth. The US has seem some growth as well, primarily in building up service to partner American’s hubs as well as introducing the A321XLR on thinner routes. But South America is the star of the show.

When we look at South America, there are really two markets. There’s Brazil with its ties to Portugal and then there’s everything else with ties to Spain. Brazil is enormous and is only slightly smaller than all the rest put together. That is TAP’s market to fight out with the Brazilian carriers, though Iberia has a respectable and growing presence. But for the rest of the continent, Iberia is not messing around.

Europe – South America (ex-Brazil) Seats by Airline

^{Data via Cirium}

In the last 20 years, this market has more than doubled in size. In general, the European carriers have been losing share as LATAM and Avianca have grown. Air Europa is the exception, and of course, IAG tried to buy Air Europa but it couldn’t be pushed through based on competition grounds. But in the meantime, Iberia has been more than keeping pace. Pre-pandemic, Iberia had about 24 percent of seats, but now that’s at 27 percent and rising.

That may not sound like a lot, but in a rapidly growing market, that is significant. Iberia is now up to 19 destinations in Latin America with Recife joining in December followed by Fortaleza in January. Both of those are operated by the A321XLR. Destination number twenty will be Monterrey in México.

In the US market, Iberia long served Chicago/O’Hare, Miami, and New York/JFK (along with San Juan), but other markets have come in and out. Boston and LA were the first to join the club in 2018 when they both start flying year-round regularly. Dallas/Fort Worth was added in 2022 thanks to the ever-growing partnership with American. San Francisco is summer-seasonal. Now Washington/Dulles is going year-round this winter for the first time thanks to the A321XLR being able to operate during off-peak times.

There’s more coming. This winter, Iberia will fly that airplane to Orlando for the first time. Next summer, it will also add American hub-Philadelphia and will make its first foray into Canada in recent memory with Toronto. If this growth sounds solid, you haven’t seen anything yet. Today Iberia has 45 long-haul airplanes. It will grow that to 70 in a few short years as part of its 2030 plan.

On short-haul, this is also a remarkably different airline than it once was. It has expanded its reach further into cities along the Mediterranean to help build connectivity, but more importantly, it has completely changed into a true hub-and-spoke airline. Just look at this short-haul map zoomed into Spain for July 2025 compared to July 2005.

^{Maps via Cirium}

Iberia was losing a lot of money flying routes it just felt it had to fly. Now it’s focused on Madrid and the places where it can make money as a network airline. You can read more about why Madrid is such a big win for the airline in its recent investor day deck.

With all of this money flowing in, Iberia is going to be hiring, refreshing cabins and lounges, and building a new headquarters. This is an airline that’s going all-in, and it expects an operating margin of 13.5 to 15 percent while it does all this. There’s no reason to think that it can’t make that happen, and that’s something you never would have heard me say even a decade ago.