Spanish airline Iberia plans to slash 4,500 jobs in a desperate bid to stem record losses.
Parent company International Airlines Group announced the restructuring plan on Friday.
Rafael Sánchez-Lozano, Iberia's chief executive, said: "Iberia is in fight for survival. It is unprofitable in all its markets. We have to take tough decisions now to save the company and return it to profitability. Unless we take radical action to introduce permanent structural change the future for the airline is bleak."
They hope to return Iberia to profitability by mid-2013.
The plan includes cutting capacity by 15 percent to focus on profitable routes. It plans to downsize the fleet by 25 aircraft.
The cuts will leave the airline with about 15,500 employees.
Short and medium haul operations will be transformed to compete with low cost carriers in Iberia's home market.
The plan will also include permanent salary cuts for remaining employees.
The airline warns that if unions don't go along with the plan, it will have to make deeper cuts.
"The Spanish and European economic crisis has impacted on Iberia, but its problems are systemic and pre-date the country's current difficulties. The company is burning €1.7 million every day. Iberia has to modernize and adapt to the new competitive environment as its cost base is significantly higher than its main competitors in Spain and Latin America," Sánchez-Lozano said.