Abstract: Building and Managing a Global Network: Iberia, Spanish Airlines, 1940-2000

Javier Vidal Olivares

Abstract

The airline Iberia was founded in 1927. From 1940 it was managed under the control of the State. It centered its strategy of commercial expansion in two main areas: Europe and Latin America. At the end of 1960 the company started to develop a first multinationalization process based on controlling flag carriers in Latin America. Given the existing restrictions in local markets by national regulations and by the IATA cartel, Iberia had to use different mechanisms to control those companies in order to avoid local and international barriers and also to develop a strategy of increasing traffic. The changing circumstances of the markets and the uncertainty of Latin American governments caused this strategy to fail. At the end of 1980 Iberia launched a program of mergers and acquisitions, pursuing a new multinationalization process also liquidated in a failure. This last failure reveals the differences in markets and local regulations compared with the past experience. The objective of this paper is to point out the differences of the two processes attempted by the company Iberia, stressing the different international contexts of the markets and of the institutions that regulate them. At the same time our aim is to explain how Iberia grew from a European state-owned flag carrier to a private global company.