Iberia 2012 CORPORATE RESPONSIBILITY Report

CORPORATERESPONSIBILITYREPORT2012

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CONTENTS

CHAIRMAN'S STATEMENT 4

0. ABOUT IBERIA 8

1. CORPORATE RESPONSIBILITY IN IBERIA 151.1 Corporate Responsibility Framework 151.2 Impact analysis 191.3 External assessment 201.4 Prizes and recognitions obtained in 2012 21

2. STAKEHOLDER ENGAGEMENT 222.1 Communication channels 222.2 Actions 232.3 Public commitment 24

3. ENVIRONMENT 283.1 Management focus 283.2 Climate change 313.3 Local air quality 383.4 Noise in the vicinity of the airport 403.5 Consumption of resources 423.6 Waste & recycling 433.7 Nature protection 44

4. CUSTOMERS 464.1 Management focus 464.2 Passenger commitments 484.3 Iberia Cargo customers 554.4 Iberia Maintenance customers 564.5 Iberia Airport Services customers 57

5. SHAREHOLDERS AND INSTITUTIONS 585.1 Management focus 585.2 Development of the different Iberia businesses in 2012 585.3 Risk management 60

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5.4 Fraud prevention and anti-corruption measures 605.5 Innovation management 625.6 Brand management 66

6. SUPPLIERS 646.1 Management focus 646.2 Responsible procurements 656.3 Supplier payment mechanisms 63

7. EMPLOYEES 677.1 Management focus 677.2 Workforce and labour relations 697.3 Satisfaction, internal communication and motivation 717.4 Training and Development 757.5 Ethics and Codes of Conduct 837.6 Equal opportunities and ethnic diversity 847.7 Work-life balance policies 857.8 Health and safety at work 867.9 Welfare benefits 907.10 Corporate citizenship 917.11 Employment of disabled workers 94

8. SOCIETY 988.1 Management focus 988.2 Contribution to the UN Millenium Development Goals 988.3 Main collaborations 1038.4 Participation in associations and foundations 1048.5 Responsible investment 106

9. ANNEXES 108A.1. Contents and Indicators according to the Global Reporting 108Initiative - versión 3.1A4. Verification Certificate 125

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Iberia focused its application of the Corporate SocialResponsibility in 2012 on the environment, the weakersegments of society, our customers and thedevelopment of our employees, within a particularlycomplicated economic situation. In this report wedescribe the principal activities and projects performedand developed within that area over the year.

With regard to the environment, the reduction of fuelconsumption and greenhouse gas emissions remainone of our priority goals. By permanently renewing ourfleet and adopting the best environmental practices inaircraft operations, the company has managed tomaintain its unit CO2 emissions on a par with previousyears. During 2012 we started to implement a modernsystem to control fuel consumption, the “FuelManagement System”, which broadens the datasample considered and incorporates an expert analysisof the procedures involved in the Iberia flightoperations. With this new tool we aim to save up to 3%in both fuel consumption and CO2 emissions.

Furthermore, within the IAGOS air quality researchproject, Iberia has begun developing the necessaryphases to install measuring equipment in one of itsA340-300 aircraft, which will carry it for approximately10 years. This project, which is part of the EU ResearchInfrastructure Strategy, consists of fitting aircraft usedon long haul routes with scientific instruments toanalyse the chemical composition of the air (H2O, O3,CO, CO2, NOX) and particles suspended in it, assessingthe quality of the air at certain pre-set heights

D. Antonio VázquezChairman of Iberia

CHAIRMAN'S STATEMENT

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throughout the world. Our company is the first Spanishairline and the third in Europe to collaborate in ascientific project of this magnitude.

In connection with our employees, we have started upthe AVANZA project, which refocuses the Training andDevelopment model with a view to meeting the needs ofa changing business environment, which requiresqualified, flexible persons, while at the same timeboosting our corporate strategy and contributingtowards the employees’ commitment to the values andculture of the company.

In the area of social action, Iberia was the first airline inthe world to join MASSIVEGOOD, an initiative of theMillennium Foundation, which aims to obtain additionalfinancing to meet the three Millennium Goals relatedwith health. From May 2011 to February 2012, all Iberiacustomers who made a purchase on the websitewww.iberia.com were given the option of making avoluntary donation to the Children Without MalariaProject. The funds raised by the 7,113 customers whomade donations, totalling 40,808 euro, have beenallocated to this project, a campaign run by the SpanishRed Cross to prevent, diagnose and treat this diseaseamong the infant population of Tanzania and Gambia.

We should also highlight the outstanding work during2012 by the Iberia Employees Parents of DisabledChildren Association (APMIB), now the second largestassociation for the disabled in Spain, after the ONCE[National Association for the Blind], with six specialistcentres in Barcelona, Madrid, Malaga, Las Palmas andTenerife. Its work is no longer limited to relatives ofIberia employees, but is open to the whole society.

Finally, I should point out that Iberia one of thecompanies with the largest capacity of influence,conversation and relationship with its followers in socialnetworks and the third company in Spain that mostconnects with its customers through these channels.


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The company has a major communication strategyusing social networking and converses and sharesinformation with its followers on a daily basis, throughTwitter, Facebook, Google+ and the Iberia blog, amongothers, while at the same time actively listening to whatis commented about its actions in the socialenvironment. This is considered first-hand, real-timefeedback, which has a tangible value, since it enablesthe company to get closer to its stakeholders,understanding their needs and heeding theirsuggestions.

Our commitment to the values of Corporate SocialResponsibility is permanent so we work constantly onactions and projects that guarantee a sustainablefuture for the company.

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About this Report

The Corporate Responsibility Report of Iberia, L.A.E., S.A. – hereinafter Iberia orthe company – is published every year to meet the reporting demands of thedifferent stakeholders in respect of its economic, social and environmentalimpacts.

To assist comprehension, the information is structured into chapters dedicatedto the different stakeholders of Iberia, applying the Corporate ResponsibilityPolicy and Framework adopted by the company, which are described in section1.1 of this Report.

The information contained in this report has been approved by the seniormanagement and the board of directors of the company and verified externallyby AENOR, recognised certification body, according to the Global ReportingInitiative, GRI 3.1 guidelines and principles (see assurance report in the Annexeshereto).

Self-declaration of “A+” application level of the GRI 3.1guidelines

Both the external checking of this report and the contentsand indicators set out herein correspond to the highestdegree of compliance (A+) with the recommendations madein the Global Reporting Initiative.

88

Leadingairlinein Spain and on theEurope - Latin Americamarket

112destinations in

39countries (Iberia group)

88 aircraft

Load factor of

81.32%

Over

80years’ experience

100 internationalcustomers

356million euro invoicing tothird parties

200,000 m2

specialised installations(7 hangars)

217engines overhauled and

3,395,809manhours

Operatesat

39airports

200airlines, services for

320,968aircraft

74million passengers

7,300items of equipment

IBERIALÍNEAS AÉREAS

IBERIAMAINTENANCE

IBERIAAIRPORT SERVICES

0. ABOUT IBERIA

STRATEGIC & SUPPORT AREAS

General Counsel y Secretary of the board

Corporate Affairs

Financial and Control

Corporate Communication

Human Resources

Risk & Security

BUSINESS

IBERIAMAINTENANCE

IBERIAAIRPORT SERVICES

CORPORATE GOBERNANCE BODIES

IBERIA AIRTRANSPORT:Commercial &

Customers Operations

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ABOUT IBERIA

b ORGANISATION STRUCTURE

In Iberia, the passenger and cargo air transport business is supplemented withanother two business lines:

# MRO: Maintenance, Repair & Overhaul.

# Ground assistance (handling) for passengers and aircraft: airport services.

Each of these businesses has its own market characteristics and stakeholders,which are described elsewhere in this Report.

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ABOUT IBERIA

b MAIN ACHIEVEMENTS IN 2012

1 Commencementof operations ofIberia Express

Launching ofÁGORA Project

New project Iberia AVANZA

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3

Iberia Express started operating on 25 March2012 with 17 routes, 14 aircraft and 500

employees.

This Iberia project is transforming T4 at BarajasAirport. It aims to revamp procedures at T4,making Iberia’s hub one of the most efficient in theworld.

Virtual agents: First network carrier in the worldto use advanced audio visual resources to informcustomers of the benefits of different productsand services.

New auto-check-in software: The new applicationfor check-in kiosks can issue boarding cards andbaggage tags in just 30 seconds.

Fast Assistance Points: information on airportservices is provided and new boarding cards andmeal and/or hotel vouchers are issued topassengers who miss connecting flights.

Iberia set up the AVANZA project in 2012,atransformation programme through which it plansto develop three basic goals:

# Renew the Iberia culture

# Implement a people-focused managementframework

# Secure the commitment of all Iberia employees

For customers:

# The Group has a greater capacity toenhance and invest in new productsand services. It is able to offer alarger selection of destinations forboth passengers and cargo, withmore connections and frequencies.

# Through the merger Iberiapassengers now have access to theBritish Airways network in Asia andthe Middle East, while Iberia’s

extensive network of Latin Americadestinations are available for BritishAirways customers.

# The oneworld alliance benefits and isstrengthened.

For shareholders:

# Shareholders participate in a leadinggroup within the air transport sector,with a vast competitive capacity andenormous prospects for the future.

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# IAG is a holding created with the vocation of incorporating more companies inthe future.

# It is the third airline group in Europe and the sixth worldwide in terms ofrevenues.

# It is included in the selective indexes FTSE100, IBEX35 and FTSE4Good.

ABOUT IBERIA

As from 24 January 2011, IAG is listed simultaneously on the Madrid and Londonstock exchanges.

Employees

59,574

377Aircraft

54.6Million passengers

> 200Destinations

1,750Direct flights (approx)

80.3%Load factor

b MAIN BENEFITS OF THE MERGER FOR STAKEHOLDERS:

b HIGHLIGHTS IBERIA +BRITISH AIRWAYS

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# The company is more global, largerand is highly competitive within theEuropean and world markets, opento the possibility of participating infuture consolidation processes withinthe sector.

# The group has a strong strategicposition and healthy finances, and isable to face the future with ampleguarantees of profitability andsustainability.

For employees:

# A large company with experienced,competent employees in all areasand businesses. Employees benefitfrom new opportunities forprofessional development, working ina sound, vanguard group, with avocation for leadership in the worldair transport industry.

# Employees benefit from sharingcultures, as new collaborations andworking groups are created,favouring diversity and inclusion.

For suppliers:

# Work strengthening bonds with astrong group, which considers itsrelations with suppliers to be veryimportant, sharing a responsiblevision with them throughout thesupply chain.

# Permanent collaboration with avision of quality products, placingemphasis on innovation andsustainability

For other stakeholders: Authorities,institutions, bodies, communities inwhich we operate, NGOs, society ingeneral:

# One of the group’s priorities is tolisten and maintain a permanentdialogue with its stakeholders.

# Broaden our mission as a means forbringing people and culturestogether.

# Participation in different aid anddevelopment projects, events,forums and programmes andhumanitarian operations will bestepped up, sharing know-how andgood practice, with ambitiouscontributions in respect of theenvironment, diversity and inclusion,collaboration in the communities inwhich we operate, maintaining andimproving a high level of cooperationwith all stakeholders.

The IAG Board of Directors consists of14 members, seven of which wereelected by Iberia and the other seven byBritish Airways. IAG also has amanagement team of five members.More Group information on CorporateGovernance at www.es.iairgroup.com.

ABOUT IBERIA

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Iberia belongs to one of the threelargest airline alliances worldwide,oneworld, along with American Airlines,British Airways, Cathay Pacific, Finnair,Japan Airlines, LAN, Mexicana, Qantas,Royal Jordanian and S7 Airlines. TheGerman airline Airberlin, whichoperates 160 destinations in 40countries, joined the alliance in March2012.

oneworld has a total fleet of 2,382aircraft.It operates at 823 airports in154 countries, with over 8,672 flights aday, which means a take-off or landing

every five seconds, providing a servicefor more than 300 million passengers ayear and directly employing 277,500people throughout the world.

Since its foundation, its maxim hasbeen customer service quality, sincethis allows the associated airlines toincrease and improve the range ofproducts and services they offer theircustomers, enabling them to travelpractically anywhere in the world.Incidentally, it is the only global alliancewith partners on all the continents.

ABOUT IBERIA

b IBERIA IN THE SECTOR: ONEWORLD

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Iberia is also a member of national and international air transport organisationscommitted to a responsible development of the air industry worldwide:

IATAInternational Air Transport Association.

AEAAssociation of European Airlines.

ALAAssociation of Airlines operating in Spain.

ACETAAssociation of Spanish Air Transport Companies.

ALTALatin American and Caribbean Air Transport Association. Iberiais an associated member.

ABOUT IBERIA

b IBERIA IN THE SECTOR: ASSOCIATIONS

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Iberia regularly updates its CorporateResponsibility (CR) managementframework to tailor it to current trendsand keep abreast of current strategicguidelines.

The framework defines theresponsibilities of the areas that haveongoing relations with Iberiastakeholders and coordinate the CR-related management systems:

b 1.1 CORPORATE RESPONSIBILITY FRAMEWORK

1. CORPORATE RESPONSIBILITYIN IBERIA

CR organisation and responsibilities in Iberia

Management

CorporateCommunication

Finance

Risks & Security

Human Resources

Commercial &Customers

Corporate Affairs

Advertising & Sponsorship

Management Control

Procurement

Emergency Coordination

Organisation

Customer Relations

Quality

Corporate Responsibility &Environment

Coordination &development ofSocial Action projects & corporatecitizenship.

Financial reporting

Direct relations with Suppliers

Crisis contingency plans

Direct relations with Employees

Direct relations with Customers(Passengers)

Quality & Innovation Measurement &Management Systems

Coordination of CR & environmentalpolicy

Área Responsibilities

Many other management and business units also provide CR-related management information

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The Corporate ResponsibilityFramework agreed by all themanagement areas involved consistsof:

# Conceptof CorporateResponsibility: what the companyunderstands by CR.

# Corporate ResponsibilityInstruments: the bases for effectiveCR management and continuousimprovement in Iberia.

# Corporate Responsibility Policy: theprinciples and goals of CR and howthey are to be developed and appliedin the different management areas ofthe company.

# Stakeholders: who they are andwhat relationships they have with thecompany.

# International standards: whatinternational CR initiatives thecompany supports and applies.

Concept of Corporate Responsibility:

In Iberia, CR is the shared commitmentto create economic and social value,respecting the environment and takingstakeholders’ expectations into accountat all times.

CORPORATE RESPONSIBILITY IN IBERIA

Mission, vision & valuesCR Policy

Guidelines

for action & management s

yste

ms

CR Actions

Reporting

COMMUNICATI O N A N D COORDINATION

Continous Improvement

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Corporate Responsibility Policy

Iberia acts in accordance with a set ofprinciples that enable it to continuegrowing in line with the servicesdemanded by its customers, within aframework of respect and preservationof the environment and activecollaboration in welfare actions, thuscontributing to the development of thesocieties in which it operates.

These principles are summed up in themission, vision and values of thecompany, shared across the board:

# Our mission: Iberia’s mission is tooffer air transport, airport servicesand MRO services that come up toour customers’ expectations andcreate sustainable economic andsocial value.

# Our vision: Iberia aims to be leaderin customer satisfaction, innovationand economic and socialperformance:

j Perceived as leader on thedomestic, European and LatinAmerican markets.

j Preferred by customers for thebest possible value for money.

j Distinguished by shareholdersforits sustained returns.

j Recognised for itstransparencyand its social andenvironmental commitment.

j A company in which people wish topursue their professionaldevelopment.

# Our values: focus on customers,creation of value, search forexcellence in management, socialcommitment, importance of people,leadership, team work, constantimprovement, adaptation to change,innovation and environmentalprotection.

This policy is specified in thefollowing goals:

# Maintain its leadership in return onassets (ROA), safety and reliability.

# Obtain recognition within society forits transparency, social commitmentand defence of human rights.

# Apply the best environmentalpractices in its businesses activities,making a rational use of naturalresources.

# Respond to the major concerns ofthe company’s stakeholders:

j Guarantee the best service to itscustomers in terms of quality andresponsibility, respecting theprotection of their rights.

j Create value for its shareholders,fostering respect for theenvironment and distribution ofwealth.


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j Support any humanitarian projectsand initiatives promoted by itsemployees, involving otherstakeholders.

j Encourage the personal, labourand social development of itsemployees within a framework ofequal opportunities.

j Promote sustainable developmentand good management practicesamong its suppliers of goods andservices.

j Work together with institutions,public administrations and othercompanies in the sector in anyinitiatives considered of interest.

j Participate in cultural, educational,sports, social and economicdevelopment projects wherever itoperates.

# See that these goals are met, withpermanent monitoring to pinpointopportunities to further thecompany’s continuous improvementin CR management.

Stakeholders

The company has identified andanalysed its different stakeholders toclassify them according to theirimportance for achieving thecompany’s goals and their capacity toinfluence or be influenced by thecompany.

Iberia’s stakeholders are divided intothe following groups:

# Strategic:

j Customers and consumerassociations.

j Shareholders and investors.

j Employees and theirrepresentatives.

j Suppliers and subcontractors.

j Regulatory and institutional: Public administrations, AENA, CivilAviation Authority, ICAO, IATA,national and local governments.

# Market:

j Transport sector: airlineassociations, rivals, alliances.

j Tourist and business sector: touroperators, travel agencies,accommodation, etc.

j Maintenance & engineering sector:rivals, alliances.

j Airport services sector: rivals,alliances.

j Social and airport vicinity: Media,Communities in vicinity of airportsand NGOs.


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# International standards

Iberia has joined the followinginternational initiatives, which are usedas a constant benchmark in theimplementation of Iberia’s RC policy:

j United Nations GlobalCompact.

j International Labour OrganisationFundamental Conventions.

j Millennium Development Goals.

Based on the company’s Risk Map andthe Global Compact principles, Iberiamakes and maintains a study andprioritization of its main sustainabilityimpacts, reaching the followingconclusions:

# The company’s development activitiesgenerate an impact on theenvironment, although Iberia hasimplemented certain mechanisms tominimise that impact, or eliminate it ifpossible.

# Being a means of transport, the safetyand quality of the company’s servicesto customers have enormousrepercussions in the public opinion.

# The risks concerning the ethics of itsbusiness, such as incidents ofdiscrimination, corruption or fraud,are very small and duly controlled.

# The company has no significantimpacts in labour, in aspects such asfreedom of association, the right tocollective bargaining or equalopportunities in access toemployment.

# Owing to the nature of its business,there is no impact in respect of abuseof human rights, such as forced orchild labour.

# The greatest impact by the companyis environmental, caused by thevolume of emissions associated withclimate change in its flight operations.Other environmental impacts,produced in its ground operations, areless significant.

This analysis has guided the preparationof this Report, which is structured in theorder of importance of the impactsanalysed.


b 1.2 IMPACT ANALYSIS

Iberia attaches great importance to theperformance assessments it receivesregularly from independent thirdparties. They are an excellentinstrument for measuring theeffectiveness of its CR actions and areused as the basis for preparing theaction plan and sustainabilityenhancement plan, in line with thecompany’s Corporate ResponsibilityPolicy.

In 2012 the company has incorporatedthe information received from thoseassessments in its CR strategy,adopting actions, setting goals andoutlining projects based on thatinformation for its annual reportpreparation process.

The principal external assessmentsaffecting Iberia which help thecompany to develop its continualenhancement policy are:

# DJSI Questionnaire and theassessment made thereof by SAMGroup, highlighting the strengths andweaknesses of the companies.

# GRI verification of the CR Report,used to rate Iberia’s CRperformance.

# Other assessments such as theFTSE4Good and the CarbonDisclosure Project are also used asinputs for measuring the evolution ofCR in the company.

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b 1.3 EXTERNAL ASSESSMENT

Iberia’s Corporate Responsibility Framework has been compared with the newinternational benchmarks ISO 26000 and Global Compact Management Model, withthe verdict that it has been designed in accordance with the basic principlesestablished in both guidelines: the 7 Core Subjects and the 6 Key Steps, respectively.

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Iberia is one of the safest airlines. TheSwiss Air Transport Rating Agency(ATRA) has included IAG among the 10safest airlines in the world.

Future Travel Experience Prize for thebest passenger assistance initiative,awarded in recognition of the differentprojects developed by the company toimprove customer service, withinnovative solutions in both airport andin-flight services.

Iberia’s Gold and Platinum CustomerServices Centre and telephonic sales

service, Serviberia,have been awarded theGold CRC by theSpanish Association ofCustomer RelationsExperts (AEERC). TheIberia Plus Oro yPlatino Centre is one of

the services most highly valued by ourcustomers for the excellent treatmentreceived and the willingness to help andsolve customers queries and problems.


b 1.4 PRIZES AND RECOGNITIONS IN 2012

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Iberia has several procedures in place forobtaining information on itsstakeholders’ expectations, throughnumerous well-establishedcommunication channels.

In addition to the communicationchannels specifically aimed at each typeof stakeholder, as mentioned in therespective chapters of this report, thecompany has devised and started up animportant Social Networkingcommunication strategy.

Every day, throughTwitter, Facebook orthe Iberia Blog, thecompany chats andshares informationwith its followers,while listening in toeverything that issaid about its

actions in the social environment. It isfirst-hand, real-time feedback, which hasa tangible value, enabling the companyto get closer to its stakeholders,understanding their needs and taking uptheir suggestions.

The use of Twitter and Facebook wasimportant once again in 2012 to solvecustomers’ queries and problems inreal time. Iberia has accounts in themain social networks at present:Facebook and Twitter (in both caseswith profiles in Spanish, English,French, German, Italian andPortuguese); and also in the Spanishyouth network Tuenti. We now havealmost one million followers betweenthese three channels. Iberia also has itsown channels in Youtube, Flickr,Google+ and LinkedIn; and one blog,megustavolar.com.

2. STAKEHOLDER ENGAGEMENT

b 2.1 COMMUNICATION CHANNELS

megustavolar.es

facebook.com/iberia

twitter.com/Iberia

youtube.com/user/iberia

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All these channels make Iberia theSpanish airline with the largest socialcommunity.Furthermore, as indicatedin the 'Twitter Engage' report publishedby Izo Consulting, which specialises inthe management of customerengagement, Iberia is the secondcompany in Spain in monthlyinteractions with its customers throughTwitter, one of the companies with thelargest capacity of influence,conversation and relationship with itsfollowers and the third company thatmost connects with its customers.

By the end of 2012, Iberia had 669,757friends on Facebook, a year-on-yeargrowth of 800%, and 199,215 followersin Twitter, a growth of 227%, making itone of the Spanish businessenterprises with the largest followingsin social networking.

Apart from these multi-stakeholderchannels, Iberia offers its stakeholdersan online survey to assess thisCorporate Responsibility Report, athttp://grupo.iberia.es, the results of

which are taken intoaccount and used toimprove theinformation given.

Supplementing this, any comments orsuggestions regarding the aspectscontemplated in this Report may besent to the suggestion box [email protected].

During 2012, the company participatedactively in the following forums, amongothers, for stakeholders to discuss theirexperience (multi-stakeholder events):

STAKEHOLDER ENGAGEMENT

b 2.2 ACTIONS

ETHICAL ADVERTISING

Iberia is a member of theCommercial CommunicationSelf-Regulation Association(Autocontrol), through which itassumes the ethicalcommitment to make aresponsible use of the freedomof commercial communicationand helps to strengthenadvertising self-regulation toguarantee respect ofstakeholders’ rights.

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# VI Exceltur Tourism LeadershipForum, in January. “Tourism as adriving force for growth andemployment: policies to enhancecompetitiveness”.

# VII International “GroundStar UsersConference” organised by InformGmbH, a specialist in technologicalsolutions to optimise handlingresources. Iberia hosted and openedthe conference this year, with aspeech on how to optimise aircraftand passenger ground serviceresources using cutting-edgetechnology. The conference wasattended by more than 200representatives from 40 of the mostimportant enterprises in the aviationsector.

# V Forum for EnvironmentalSustainability of Tourism in Spain,Futuralia 2012. This year the forumanalysed the environmental impactof certain sub-sectors of the tourismindustry. Iberia was able to share itsexpertise and experience on the

environmental impact of its businessand initiatives that it has in place todefend environmental sustainability.

# Course on Air Transport andClimate Change, VIII edition of theSummer Courses organised by thePolytechnic University of Madrid.Iberia participated in this event as inprevious years, presenting the courseon air transport and climate change.

Iberia also promotes collaboration andinteraction among differentstakeholders, acting as official carrierfor numerous national and internationalFairs, Congresses and Events andoffering participants special rates onIberia flights.

Iberia, as part of the society for which itprovides its services, has taken intoaccount the main concerns of thatsociety during 2012:

# Economic recession: The companyfirmly believes that the solution tosome of the causes that led to thecrisis can be found in CorporateSocial Responsibility. In times ofcrisis, sustainable managementshould increase and all socialpartners should be committed toinnovation, knowledge and trainingas keys to competitiveness.


b 2.3 PUBLIC COMMITMENT

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In 2012 AENA approved an increasein airport charges for passengers.After studying the situation, Iberiadecided not to apply the increase totickets already issued, charging thenew rates only on tickets issued afterthat date.

Iberia was adopting a decision thatother airlines had previously made,but travel agencies have underlinedthe importance of this measure inIberia, not only because of the largervolume of traffic, but also because itsdecision could set a precedent to befollowed by other airlines.

The Iberia CEO, Rafael Sánchez-Lozano, assured that they haddecided not to apply the newcharges to those who had boughttheir tickets prior to 1 July, in spite ofcurrent financial difficulties in thecompany. “We will bear anyadditional cost of those tickets sothat our customers do not lose out,especially in these times of financialhardship", the CEO explained.

# Protection of human rights andhumanitarian aid: As a responsiblecompany, Iberia incorporates andcontemplates respect for humanrights in its operations, based on theprinciples established in theUniversal Declaration of HumanRights, the eight FundamentalConventions of the InternationalLabour Organization and the United

Nations Global Compact, whichIberia joined in 2004.Iberia is committed to theMillennium Development Goalsthrough economic contributions andthe donation of other resources forsocial action projects, especiallythose promoted by its employees.The company runs promotioncampaigns to encourage itsstakeholders to become involved inthe achievement of these goals. Moreinformation in the Employees andSociety chapters.

# Climate change: Iberia continuesdeveloping its strategy to combatclimate change, which it considersone of its corporate priorities, thedetails of which can be consulted inthe Environment chapter.

In November 2008 the EuropeanUnion approved a Directive to includeaviation in the EU emissions tradingscheme. According to this regulation,all airlines operating flights whicharrive at or depart from anaerodrome situated in the territory ofa Member State must adjust theirCO2 emissions to the limit stipulatedin EU law as from 2012.

However, owing to the stronginternational opposition to thisregulation, which is seen to encroachupon the sovereign powers of non-EU countries and distort competitionbetween Europe and the rest of the


world, the European Union wasforced to modify the scope ofapplication temporarily at the end of2012: during its first year ofapplication, it will only affect theemissions of intra-European flights.

Iberia supports this change since iteliminates the risk of non-EUcountries taking reprisals against theairlines of EU Member States.Moreover, this decision will enableICAO to adopt a legal framework tocombat climate change globally,avoiding regional proposals whichare generally ineffective, since theproblem is clearly international.

# Growing need for mobility: Iberiaconsiders it important to developintermodal transport policies inSpain to guarantee a socially,environmentally and economicallyefficient system.

Iberia and Alsa signed an intermodaltransport agreement in 2012whereby the two companies willjointly transport passengers fromdifferent Spanish provinces toTerminal 4 of Madrid-Barajas Airport,from where they can fly to theirinternational destinations with Iberia.This agreement will become effectivewithin the next few weeks.

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Iberia and Alsa are the first Europeancompanies to join forces to offer thistype of service, combining transportby coach and plane in a single “bus &fly”ticket.

These tickets can be purchasedthrough the normal distributionchannels of Iberia or travel agenciesand will indicate all the differentstages of the journey to be made,both overland with Alsa and by air forthe international leg of the journey,flying with Iberia.

Both companies have coordinatedcombined bus-plane timetables

which are calculated precisely to givepassengers enough time to check inor collect their baggage at theairport, get through the securitychecks and catch their connectingflight or bus.

With all these benefits, thisintermodal service not only offersgreater value and convenience forcustomers, but also considerablyenhances the utilisation ofinfrastructures and permits greaterterritorial accessibility.

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Environmental protection is one ofIberia’s corporate priorities. Thecompany strives relentlessly tomaintain a balance betweendevelopment of its business activitiesand their impact on the environment.

Iberia’s in-flight and ground operationsmay affect climate change, the qualityof local air, noise, the consumption ofresources and waste generation.

To adequately control these aspects,the company defines and updates a setof measures which include theimplementation of environmentalmanagement systems, training,

motivation and awareness of itsemployees, regular checks and auditsand the participation and collaborationwith its stakeholders in environmentalissues.

Environmental management

The implementation and maintenanceof environmental management systemsenable the company to develop itsenvironmental policies and meet pre-established management objectives.The following diagram shows theenvironmental management systemscurrently established in Iberia:

3. ENVIRONMENT

b 3.1 MANAGEMENT FOCUS

Management systemfor the monitoring,reporting andverification of CO2

emissions

Internal controlsystems for acousticemissions and local airquality

FLIGHTOPERATIONS

GROUNDOPERATIONS

Airport servicesMaintenance LMZ/AZI/T4FacilitiesCargoMedical serviceAircraft lineMaintenance

Management SystemsISO 14001

E n v i r o n m e n t a l c o n t r o l f o r s u p p l i e r s

InternalManagement Systems

ENVIRONMENTALAUDITS ANDCONTROLS

COODINATIONCORPORATEENVIRONMENTDIVISION

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The company establishes action plansto implement the environmentalvariables in the fleet renewal processesand adopt the best practices in flightoperations. Iberia’s participation innational and international task forcesthat address these issues enables thecompany to adapt its policy on thismatter, keeping it permanently up todate.

During 2012, AENOR checked Iberia’smanagement system for monitoring,reporting and verification of CO2emissions, in accordance with the EUemissions trading system. This marketmechanism caps the total quantity ofemissions of the sector as from 2012.Any airlines that exceed their maximumquota of emissions must buy emissionallowances from other operators orplants subject to the laws on thismatter. The market thus provideseconomic incentive for the cleanerairlines and penalises those that pollutemore. Iberia, through an internal ad hocworking group, has adapted its internalprocedures and now complies withthese requirements.

The Iberia fleet also complied in 2012with the international environmentalstandards established by theInternational Civil Aviation Organization(ICAO) on noise emissions and thosereferring the quality of air below analtitude of 900 metres in the vicinity ofairports.

Iberia pinpoints and assesses theenvironmental aspects of its groundoperations to rate the extent to whichthey affect the environment. It thendefines its management strategyaccording to that rating. The companyhas externally certified environmentalmanagement systems, internalmanagement systems and specificprocedures which cover all the activitieshaving any environmental impact.

Iberia’s airport serviceshave been awarded theAENOR certificate fortheir Integrated Qualityand Environment System,under the ISO 9001 andISO 14001 standards,respectively. This is

unique in that it encompasses in asingle integrated system the operationsof over 30 stations throughout thenational airport network.

Iberia also has aManagement Systemcertified under ISO 14001for its MRO operations inMadrid and Barcelona.This is one of thebroadest certificationsever awarded by AENOR

in terms of area and variety ofenvironmental aspects covered. Thesecertificates require a huge human andmaterial effort: environmental analysis,adequate documentation, training,awareness and preparation ofinstallations, among other aspects.

ENVIRONMENT

3300

Iberia’s industrial areas in Madrid haveIntegrated Environmental Authorisation(IEA), which means that both theindustrial installations and theprocedures performed there toeliminate all kinds of pollutants (waste,effluent and air emissions) comply withthe guidelines and good practicesestablished in the EU "IntegratedPollution Prevention and Control"(IPPC) Directive. AENOR checkedIberia’s monitoring, notification andverification of CO2 emissions in 2012according to the EU emissions tradingsystem, which affects theseinstallations.

Iberia has taken out EnvironmentalResponsibility Insurance in pursuanceof the applicable laws and regulations.

Environmental audits

A total of 34 internal environmentalaudits were made in areas of Iberia withsignificant environmental impacts in2012, during which some 68 actions forimprovement were identified. Theseaudits were made in the areas of FlightOperations, Airport Services, MRO,Cargo and Medical Service.

ENVIRONMENT

Distribution by Iberia areas of the workshops dedicated to internalenvironmental audits in 2012

Medical service

Air Cargo

Airport Services

Aircraft Maintenance

CO2 emissions in flight44%47%

3% 3% 3%

3311

Environmental awareness andtraining

Continuous training in the applicationof different internal environmentalprocedures is common practice in thecompany. Training and awarenesscampaigns are provided for thetechnical staff on the best practices inflight operations, with the aim ofreducing noise and fuel consumption,the latter being directly proportional toCO2 emissions.

In this regard, the company runs acourse for new Captains on thecompany policies, procedures andstrategies for saving fuel and reducingnoise, optimum fuel management anddecision-making.

Continuous training is also given for alltechnical staff: once a month they areinformed on the evolution of fuelconsumption, the best practicesrecommended by Airbus and IATA andhow Iberia handles fuel procurement.

EnvironmentOfficers haveincluded goodenvironmentalpracticesmodules in thetraining coursesfor groundoperations andissue instructions

on the correct management of urbanand/or hazardous waste, depending onthe activities of each business.

Flight operations

According to the IntergovernmentalPanel on Climate Change (IPCC), theaviation sector contributes only 2% ofthe total CO2 emissions generated bythe consumption of fossil fuels.Nevertheless, in view of air trafficgrowth forecasts the sector ought totake measures to minimise the increasein these emissions.

Zero growth in CO2 emissions by2020

In line with other IATA (International AirTraffic Association) airlines, Iberia hasdefined its future strategy for limitinggreenhouse gas emissions from itsoperations. This Strategy contemplatesthe following goals:

ENVIRONMENT

b 3.2 CLIMATE CHANGE

3322

1. Zero growth in CO2 emissions by2020, i.e. Iberia will continue to grow,but its carbon emissions will not.

2. Enhance fuel efficiency by 1.5% p.a.on average from 2009 to 2020.

3. 50% reduction of total emissions by2050 compared to 2005.

The EU legislation on emissions tradingwas modified during 2012, limiting itsprovisions exclusively to intra-Europeanflights. Iberia is in favour of thismodification since it eliminates the riskof countries against the legislationtaking reprisals against the airlines ofcountries that support the regulation.Moreover, this decision will facilitate theprocess for countries to agree on a

global solution through the channelsoffered by the International CivilAviation Organization (ICAO).

Iberia’s main goal for dealing withclimate change is to reduce itsemissions, achieving sustained,efficient growth. The measurescomprising this strategy are describedbelow.

Fleet renewal:

The average age of the Iberia fleet atthe end of 2012 was 9.2 years.According to IATA, the average fleet ageof a traditional network carrier isaround 10-12 years, which means thatthe Iberia fleet is below average.

ENVIRONMENT

3333

Between 2013 and 2014 Iberia plans toadd 9 new A-320 aircraft and 8 newAirbus 330 for its long-haul routes,using cutting-edge generationtechnology to optimise fuelconsumption, saving 15% per aircraft inkerosene compared with the existingAirbus 340-300 they will replace. Thisfuel saving will in turn lead to areduction in emissions, while the newengines will be less noisy.

With these new additions, the averageage will be reduced by almost 5% overthe coming 2 years.

Other measures:

Further measures were taken during2012 to reduce the weight of aircraft,which directly reduces fuelconsumption and, therefore, CO2

emissions. These measures included,

for example: reduction of fuel loadedfor each flight, alternative reassignmentof airports to use those closest to thedestinations, readjustment of quantityof drinking water carried (up to 25%reductions), renovation of aircraftinteriors with lighter seats andcontinuous studies to reduce theweight of in-flight material (magazines,cutlery, etc.).

Adjustments in cruise speed continuedin 2012 (in both long-haul and shortand medium haul flights), along withchanges in acceleration altitudes,reduction of standard thrust or use ofthrust reverse. Since 2011 90% of theIberia fleet has been fitted with asystem for sending automaticmessages (ACARS, AircraftCommunications Addressing andReporting System) indicating the fuelconsumption and, therefore, the CO2

emissions in each flight phase. Thisenables the company, with 80% of thetotal data issued, to make exhaustivemonitoring of these parameters, usingthe best available technology, and totake additional measures to reduceconsumption and emissions.

Energy efficiency was also improved in2012 and emissions were reducedthrough flight scheduling, assignmentof fleets for the different routes, fleetutilisation and optimisation of the loadfactor. The load factor was 81.5% in2012, above the average of theEuropean network airlines, and fleet

ENVIRONMENT

Forecast evolution of the average ageof the Iberia fleet (years)

9.5

9.0

8.52012 2014

9.2

8.8

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utilisation reached a record level for thecompany this year, with an average of10.1 block hours per aircraft per day.

Projects:

# NIMBUS-IBERIA:

In 2012 the Iberia OperationsManagement, in collaboration withthe Systems Management,implemented a new system forcalculating flight plans, withconsiderable advantages over theprevious system. This new systemintroduces new concepts andimprovements in the calculationsrequired to plan flights, whichincreases the reliability and efficiencyof the air routes, reducing fuelconsumption and CO2 emissions.

# NEW FUEL MANAGEMENTSYSTEM:

Iberia, together with British Airways,is introducing a new fuelmanagement system. Theimplementation of this computerisedtool is being coordinated by theIberia Fuel Manager through aworking group involving thecompany’s Operations, MRO andEnvironment divisions. This newsoftware broadens the sample ofconsumption data considered andincorporates an expert analysis ofIberia’s in-flight operations andprocedures. The scope of applicationof this tool embraces groundoperations, monitoring of operationalfuel consumption, review of in-flightoperation procedures and policies,analysis of weight carried, flightplanning and MRO activities. Thistool could enable an estimated 1-3%saving in the company’s total fuelconsumption.

# NEW ULTRA-LIGHT TROLLEYS:

During 2012 the In-Flight ServiceManagement gradually changed thetrolleys used for catering on aircraft.The traditional trolleys have beenreplaced with new ones that are upto 35% lighter, thereby reducing the

ENVIRONMENT

3355

weight carried by the aircraft, with aconsequent major fuel saving. Anoverall reduction of 2,000 tonnesCO2 has been estimated for theentire fleet in 2012. This measure willreach its final phase in the firstquarter of 2013, when all trolleys onIberia aircraft will be ultra-light.

# BIOFUEL FROM MICROALGAE:

The company participates with AENAin the project for producing biofuelfrom microalgae, developed by thecompany Alga Energy. Themicroalgae are being cultivated at anexperimentation technological plantinstalled next to Madrid-BarajasAirport. The centre researches,experiments with and finds ways toimprove the technologies forcapturing CO2 and cultivatingmicroalgae, used to producebiomass, from which biofuels arethen obtained. In Iberia this project is

being coordinated by the Assets andInfrastructure Department and thefirst samples of water from the LaMuñoza Treatment Plant were takenin 2012 for subsequent use as feedfor cultivating these organisms. Theultimate goal of this participation isto promote the production ofbiofuels that will help to reduce theCO2 emissions generated duringoperation of the Iberia fleet.

# IAGOS: Iberia formalised itsparticipation in the IAGOS air qualityresearch project in 2011. This project,included within the EuropeanStrategy Forum on ResearchInfrastructures, consists of fittinglong-haul aircraft with scientificinstruments to analyse the chemicalatmospheric composition (H2O, O3,CO, CO2, NOx), aerosols and cloudparticles, assessing air quality at

certain altitudesthroughout theworld. During2012 theCompany began

developing the necessary phases toinstall the measuring equipment onone of its A340-300 aircraft, which itwill carry for approximately 10 years.Iberia is the first Spanish airline andthe third European airline tocollaborate in a scientific project onthis scale.

ENVIRONMENT

3366

By implementing the above-mentionedmeasures, the company has managedto achieve a cumulative 5% reduction inCO2 emissions per passenger since2009, maintaining its unit emissions in2012 at similar levels to 2011.

Ground operations

The greenhouse gas emissions fromIberia’s ground operations account forapproximately 1.4% of the totalemissions of this nature generated bythe company. Following the GHGProtocol, emissions can be classifiedinto:

# Direct emissions (Scope 1), in ourcase these are emissions fromboilers and diesel and natural gasgenerators; as well as emissionsproduced by petrol and dieselvehicles used for aircraft handlingtasks.

# Indirect emissions (Scope 2), that is,emissions produced during thegeneration (by different means) ofthe electricity consumed at thecompany’s installations.

ENVIRONMENT

IBERIA AND IMPLEMENTATION OF A–CDM

Iberia collaborates in the implantation of the A–CDM (Airport Collaborative DecisionMaking) at Barajas Airport, a European project aiming to improve air traffic andcapacity management at airports. This commitment was formalised with the signingof a Memorandum of Understanding in July 2012 between AENA, Iberia and BarajasAirport. The implementation of A-CDM at Barajas is, moreover, an important exampleof the commitment of AENA and Iberia to collaborate within the Ágora project.

Evolution of CO2 emissions of theIberia fleet measured in grammes perpassenger

120

100

902009 2010

100.1

110

2011 2012

104.7

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# Other indirect emissions (Scope 3),which are emissions produced byemployees as they travel to workusing different means of transport.These emissions are estimated,owing to the difficulty of calculatingthem as the company does notdirectly control them.

These direct emissions account for29% of the total emissions from groundoperations, while indirect emissionsrepresented 38% in 2012 and theremainder corresponds to otherindirect emissions (Scope 3).

The following graph shows theevolution of direct emissions (Scope 1)in tonnes per employee over the pastthree years. As seen in the graph, thistype of emissions has been reduced by22% over the past three years. In 2012they were reduced by 4% year on year.

The reduction has been achievedmainly by lowering the quantity ofnatural gas and gas-oil used inindustrial areas, through the use of newtechnologies that enhance energyefficiency in the industrial processes ofMRO, as well as the introduction of anew system of refuelling of groundequipment used at Barajas AirportTerminal 4.

A new telemetry system wasintroduced in 2012, based on theinstallation of a wireless link terminal inthe fuel tenders, which associates therefuelling with the vehicle beingrefuelled using rings withradiofrequency chips incorporated inthe ground equipment. At the sametime, the vehicles will be fitted with areader that registers the times whenthe engine is on and the kilometrestravelled. This system enables real-timecontrol of the volume of fuel stored andrefuelling needs. This fuel telemetrysystem has been installed in the 4refuelling units, with which Iberiasupplies fuel to the almost 1,000vehicles it uses to provide handlingservices at Barajas. This fuel measuringsystem has enabled a 5% saving in theconsumption of its ground equipment,reducing the CO2 emissions by 520tonnes a year, equivalent to theabsorption of 2,600 trees.

See the Annexes to this Report formore detailed information on theemissions inventory.

ENVIRONMENT

Direct Emissions per employee in 2012

2012201120100

1.00

2.00

1.50

0.50

Ton. of CO2 per employee

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Local air quality in and around airportsis affected by aircraft emissionsgenerated during take-off and landing,consisting mainly of: nitrogen oxides(NOx), carbon monoxide (CO) andunburned hydrocarbons (UHC). Thanks

to technological progress, aircraftemissions in the vicinity of airports aregenerally low. In fact, over the past fewdecades levels have been reduced verysignificantly.

ENVIRONMENT

CO2 CALCULATOR AND IBERIA FORESTS

In line with the environmentalstrategy to combat climatechange, Iberia offers customersand employees information onthe carbon footprint of theirvoyage. A CO2 calculator isavailable at iberia.com to

estimate CO2 emissions for given routes and persons.

It is also possible to make voluntary donations for the preservation and sustainablemanagement of natural spaces around certain Spanish airports.

The voluntary donations and plantations are managed by “Plantemos para elPlaneta”, a non-profit organisation that aims to revitalise the planting of trees andpreservation of forests and to develop in Spain the worldwide campaign of theUnited Nations Environment Programme (UNEP).

The joint project website, operative as of December 2011, is:www.plantemosparaelplaneta.org/bosqueiberia/index.asp

b 3.3 LOCAL AIR QUALITY

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The International Civil AviationOrganization (ICAO), responsible forsetting limits on the emission of thesegases by aircraft, has gradually raisedthe NOx emission limits imposed onaircraft manufacturers since theeighties: by 20% in 1993 and 16% in1999. In addition, the new standardapproved in 2004 for new enginesmanufactured in or after 2008 is setsthe permitted emissions level 12%lower than the previous standard andbrings the total reduction to 40% sincethe introduction of the first restriction.

Iberia has maintained the samepercentage as in 2011 of aircraft in itsfleet that comply with the mostrestrictive NOx standard (CAEP6).CAEP 6 is not applicable to thecompany’s engines, but is a goodpractice benchmark. The percentagecompliance is expected to rise inforthcoming years as the new A330fleet is introduced

The measures taken by Iberia to reducethese emissions focus, just as forreducing CO2 emissions, on fleetrenewal, incorporating less pollutingengines, and the development ofoperating measures such as applicationof the continuous descent approach(CDA). NOx emissions can be cut by upto 40% by this measure.

Moreover, at Madrid-Barajas Airport,where the bulk of the company’soperations are concentrated, theairport authority AENA has an airquality monitoring network (REDAIR)which continuously and automaticallyexamines the levels of pollutants fromemissions generated at low altitudes.The readings obtained are publisheddaily to make sure that the equipmentoperating at the airport, includingaircraft, does not generate pollutionlevels in excess of the standards set inthe applicable regulations.

ENVIRONMENT

Compliance with the ICAO NOxstandards (CAEP 1 & 2) by the Iberia fleetat 31/12/12 (CAEP 4 & 6, are not applicable to the company due to the manufacturing dateof the engines; they are include as a good practice benchmark.)

CAEP 6CAEP 4CAEP 1 and 20

40%

100%

80%

60%

20%

% of total

100% 100%

67%

Noise from aviation produces local impactsin areas around airports and is generated inflight operations at altitudes below 3,000 ft(approx. 900 metres).

With the technological progressincorporated in modern engines and theimproved aircraft aerodynamics, aircraftnoise levels have been halved over the pastten years.Technological researchanticipates achieving a further 50% cut by2020.

The ICAO Noise Standards control noisepollution during flight operations(approach, landing, take-off and climbing):

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The graph shows the cumulativereduction of total NOx emissions by theIberia fleet over the period 2008-2012.Taking 2008 as the base year, the graphshows the cumulative reduction in eachperiod. The cumulative reduction overthe past 5 years is approximately 25%.

ENVIRONMENT

Evolution of NOx emissions in the Iberiafleet (base year 2008)

20122011201020092008

Compliance with the ICAO noisestandards chapter 3 & 4 by the Iberiafleet at 31/12/12(Charter 4, is not applicable to the company due to the manufacturingdate; they are include as a good practice benchmark.)

Chapter 3

100%

Chapter 40

100%

80%

60%

40%

20%

% of total

83%

b 3.4 NOISE IN THE VICINITY OF THE AIRPORT

4411

This graph shows the situation of theIberia fleet in 2012 in relation to thenoise standard applicable to it (Chapter3) and the more restrictive standard(Chapter 4), which, although notapplicable owing to the manufacturingdate of the aircraft, reflects theadvanced technology used in thecompany’s fleet. A report published byOBSA (Observatory of Sustainability inAviation) indicates that only 57% offlights in Spain operate with Chapter 4aircraft. But in 2012 Iberia operated83% of its flights with Chapter 4aircraft.

The company complies with theoperating procedures laid down by theSpanish civil aviation authorities,making a limited use of auxiliaryengines in airports, reducing the use ofbrakes by using the thrust reversetechnique and following the routesestablished by air control for arrival anddeparture at airports.

Moreover, the airport authority AENAhas established noise restrictions onaircraft operations at Madrid-Barajasairport since 2000. In order to establishthese restrictions, aircraft have beenclassified into “noise levels” (NL),according to their individual noise ontake-off. There is a NL classification forthe different decibels, covering a rangefrom 0 to 16 (the closer to 0, the lowerthe noise level). The low noise level ofthe Iberia fleet is evidenced by the factthat the company does not operate anyaircraft above NL 2.

The graph shows the distribution oftake-offs by the Iberia fleet at Madrid-Barajas Airport in 2011 and 2012according to the noise levelclassification (NL 0.5 is the mostsilent). In 2012, 60% of operations weremade with the most silent aircraft, witha slight increase in the percentage ofnoisier aircraft, due to the increase offlights made by the long-haul fleet.

In addition, at Madrid-Barajas Airport,where the company concentrates thevast majority of its operations, theairport authority AENA has a noisemonitoring network (SIRMA) whichdetects, measures and associates thenoise produced by aircraft when theyfly over microphones installed instrategic areas around the airport. The

ENVIRONMENT

Noise of Iberia fleet (NL) and itsshare in the total take-offs at Madrid-Barajas Airport in 2011 and2012.

201220110

40%

100%

80%

60%

20%%

of to

tal

63.7%

21.1%

15.2%

59.5%

23.7%

16.8%

Fleet NL 0.5

Fleet NL 1

Fleet NL 2

Electricity consumption

Electricity consumption in 2012remained at practically the same levelas in 2011, with a slight overall increaseof 1%. The reasons for this slightincrease are mainly the increasedproduction in industrial zones and thevariation of new production processesin cargo operations.

Despite this increase in activity in theMRO area (they are productionprocesses with high energyconsumption) electricity consumptionwas very similar to that of 2011 so therehas been a slight improvement inenergy efficiency.

Water consumption

Total water consumption in 2012 was15% less than in 2011 and 28% lessthan in 2010. This reduction wasachieved by various measures,including moving some of the cargooperations from older to more modernbuildings, and other specific measuresto reduce consumption, such as: theinstallation of water-saving nozzles on

taps at the Barajas offices, changingirrigation times to reduce evaporation,etc.

Paper consumption

Paper consumption was reduced againin 2012 as a result of the reductiontargets set through the innovatingresource-saving projects and byapplying continuous improvement, thebackbone of EnvironmentalManagement Systems.

The company policy is to convertpaper-consuming administrativeprocesses into electronic equivalents.

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readings obtained are published dailyto make sure that the aircraft operatingat the airport do not exceed the noise

levels stipulated in the EnvironmentalDeclaration of this airport.

ENVIRONMENT

b 3.5 CONSUMPTION OF RESOURCES

4433

In 2012 this policy was applied in thefollowing areas:

During 2012 Iberia further extended thenumber of destinations for which thereis access to the mobile Boarding Cardservice, which enables its customers todownload their boarding cards fromIberia.com to a mobile or PDA andboard the aircraft directly, withoutprinted cards, which makes the processfaster and more dynamic whilereducing the use of paper.

Since January 2012 and in an effort tofurther reduce the use of paper, Iberiahas developed a new boarding cardavailable on its website iberia.com.

Apart from improving the designformat, this boarding card is reduced toa single page, thereby saving ourcustomers some 5 million pages in2012; equivalent to the timber fromaround 450 trees.

As illustrated by the following graph, in2012 Iberia continued to reduce thetonnes of SUW (Solid Urban Waste) ona global company level through theimplementation of recycling systems indifferent areas of the company. Specialinterest is put into completing thesystem of urban waste collection in thedifferent buildings of the company. Thissystem allows the separation of organicwaste and plastic containers throughthe provision of distinguishedcontainers in all Iberia buildings.

ENVIRONMENT

b 3.6 WASTE

Tonnes of Urban waste in 2010-12

2010 20120

2,500

2,000

1,500

1,000

500

2011

Iberia collaborates closely in theprotection of endangered species. Ithas been a member of the Conventionon International Trade in EndangeredSpecies of Wild Fauna and Flora, CITES,since 1986 and, therefore, does notpermit the carriage of any of thesespecies on its flights.

It also participates actively in returningunlawfully removed animals to theirnatural habitats. As an example of thiscommitment, during 2012 and for thethird year in succession, Iberiacollaborated with the project organisedby Fundación Migres for the recovery ofthese species.

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Improvements continued in 2012 at theselective waste-collection pointinstalled at the La Muñoza facilities,with a new investment in the roof andwalls. Through this selective waste-collection point, which enables wasteseparation at source, Iberia aims toachieve its “zero urban waste” goalwithin the coming years.

The complete installation of sharedmultifunction equipment (printer +photocopier + fax + scanner) in theoffices also reduces the wastegenerated in ink and toner cartridges,while also reducing electricity andpaper consumption, as mentionedearlier.

In December 2012 Iberia formalised itsparticipation in the IATA Cabin Wasteworking group, which aims to study thepresent situation of all waste generatedin flight on aircraft; analyse the bestwaste recycling and management

practices; and develop pilotexperiences on some flights to obtaininformation, with the ultimate goal ofdeveloping an integral management ofthis type of waste.

See the Annexes to this Report forinformation on the evolution andmanagement of other environmentalaspects of ground operations, such aswater consumption, waste generation,sewage, etc.

ENVIRONMENT

b 3.7 NATURE PROTECTION

4455

Since 2010 the airline has providedtransport for 56 baby fish eaglesdonated by the Bird PreservationCentre in Brandenburg (Germany). Thechicks of this bird of prey will be takento their new homes, in the OdielMarshlands Nature Reserve (Huelva)and the River Barbate reservoir in theAlcornocales Nature Reserve (Cádiz).Since the Environmental Department ofthe Regional Government of Andalusiaset this project up in 2003, with theparticipation of the Doñana BiologicalStation (CSIC) and Fundación Migres, atotal of 146 baby fish eagles have beenreinserted in the environment and

some of them in both Huelva andCadiz, on reaching sexual maturity,have now reproduced.

Iberia has been involved in theprotection of endangered species onnumerous occasions. Since 2007 theairline has run a campaign defendingSpanish endangered species,christening 15 of its aircraft with namessuch as Iberian lynx, brown bear orSpanish imperial eagle, among others,with the aim of publicising at all Iberiadestinations the richness of Spanishbiodiversity and stimulate awareness ofthe need to protect and conserve them.

ENVIRONMENT

4466

Firmly committed to its customers,Iberia guarantees quality service atevery stage of their journey. The Iberiastrategy contemplates enhancement ofcustomer service quality as one of itsprime objectives.

Iberia has several mechanisms forcontrolling and monitoring the qualityof its processes and services, assummarised in the following figure:

4. CUSTOMERS


Service perceivedby our Customers

Objective measuringof complianceby processes

Expectationsof our Clients

Processes definedby the Company

Obtained Quality Level OQLPerceived Quality Level PQL

SYSTEM FORMAEASURING

CUSTOMERGEAREDQUALITY

4477

The systems for measuring quality, PQLand OQL, are part of a general quality

model in the company, structured asshown in the following flowchart:

As shown above, all key areas of thecompany have now been certifiedunder the requirements established inUNE-EN ISO 9001:2008, which includespecific quality indicators relating tothe processes of the different activities,subject to regular internal and externalcontrol.

Iberia has extensive, proven experiencein the safety of all its operations, both

ground and in-flight. The company hasassurance systems that regulate theoperation and maintenance of aircraftin accordance with the EASA and FAAinternational standards.

Iberia’s Operating Quality and SafetyManagement System has beencertified under the IATA OperationalSafety Audit (IOSA) standards. Assuch, it is subject to regular audits,

CUSTOMERS

PurchasesISO 9001

InfrastructureISO 9001

SistemsISO 9001

ISO 27001

SUPPORT PROCESSES

KEY PROCESSES

AIR TRANSPORT

Comercial management

AIRPORTSERVICES

AIRCRAFTMAINTENANCE

Airports: ISO 9001ISO 14001

Maintenance: ISO 9001ISO 9110ISO 14001ISO 17025

Provision of service

Customer Service Management

DESIGN OFTHE SERVICE

CUSTOMERREQUESTS

CUSTOMERSATISFACTION (PQL)

SERVICEQUALITY (OQL)

Operations: ISO 9001In-Flight Service: ISO 9001Cargo: ISO 9001 andCargo 2000

Customer Service /Claims: ISO 9001

Commitment to passenger rights

The company remains committed tocompliance with the European AviationCustomer Commitment, a code ofconduct signed on 2 July 2002 togetherwith the other airlines in the EuropeanAirline Association (AEA), in whichobligations are established such asrespecting the agreed price, providingsuch information as may be required onthe company, notifying passengers ofany incidents and providing assistance,expediting the payment of refunds andattending reduced-mobility passengersand minors, among others.

Iberia deals with passenger claims inaccordance with the prevailingEuropean regulations on compensation

and assistance to passengers in theevent of denied boarding and ofcancellation or long delay of flights(Regulation (EC) No 261/2004 of theEuropean Parliament and of theCouncil of 11 February 2004).

With regard to data protection, Iberiacomplies with the Personal DataProtection Act of 19 April 2008. It haspublished internal regulations on thesubject and started up an InformationSecurity Committee to guarantee theconfidentiality and integrity of thatinformation and prevent anyunauthorised use of the data.

Iberia maintains its ISO 27001certification of the Information SecurityManagement System, covering the

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which reveal the strength of thecompany’s controls.

In addition, Iberia has a very broadinsurance programme with policiestaken out with top-ranking Spanishinsurance companies and reinsurancewith highly solvent companies oninternational markets to guaranteecover in keeping with the best practices

on the air traffic market and exceedingin all cases the minimum requirementsstipulated in the Spanish Air NavigationAct and International Conventions.

Iberia is one of the safest airlines. TheSwiss “Air Transport Rating Agency”(ATRA) has included IAG among the 10safest airlines in the world.

CUSTOMERS

b 4.2 PASSENGER COMMITMENTS

4499

processes related with Iberia.com andthe Employee Portal (IB Personas) andits Data Processing Centres.

Commitment to price transparency

Iberia publishes the final prices of itstickets, including all the differentelements comprising each price, suchas fuel surcharges, issue charges orairport taxes, such that the announcedprice is the final price of purchasing theticket.

In the study made by the Departmentof Consumption of the EuropeanCommission on compliance with EUlegislation on airline ticket sales onInternet, Iberia is one of the Europeanairlines that fully respect those laws, forits price information transparency andconsumer protection in the servicesoffered on Iberia.com.

Commitment to health

In its in-flight magazine, Ronda Iberia,the company includes some practicaladvice on how to make the flight morecomfortable and healthy. For example,exercises are described to prevent deepvein thrombosis, especiallyrecommended for passengers withcirculation problems on long haul

flights. The Company also informs onthis syndrome in a video played on allflights of over three hours. This advicecan be consulted at:www.iberia.com/viajarconiberia/

All food products served in flight in thedifferent catering services are subjectto strict health and safety controls, inpursuance of prevailing laws and

CUSTOMERS

ULTRA-YOUNG PRICES FOR "PEOPLE IN A HURRY FLY"

Iberia ran several campaigns during 2012 of special prices for young people,through the website www.iberiajoven.com. It is a campaign with unbeatable pricesoffered for limited periods of time and for specific dates, with the aim of being ableto offer very competitive prices for this segment of the population.

5500

regulations. The company also offersdifferent menus to suit the needs of allcustomers (gluten-free, vegetarian,etc.).

In collaboration with Wolters Kluwer,Iberia runs courses to overcome fear offlying, with extremely high successrates. In these seminars, Iberia pilotsinform participants about air safety andhow aircraft work, while a group ofpsychologists teach them relaxationtechniques.

Commitment to passengers withspecial needs

Reduced Mobility Persons (RMP)receive special assistance free ofcharge from their arrival at the airportof departure to their departure from thedestination airport. All passengers witha disability or illness are accompaniedto the aircraft and their wheelchair, orguide dog in the case of the blind,travels on board at no additional cost.

Iberia also provides RMP passengers atall airports in the network withdocuments containing essentialinformation on their rights andobligations, in formats accessible to allkinds of disability. The contents of

www.iberia.com are regularly updatedfollowing the WAI (Web AccessibilityInitiative) guidelines.

The Iberia Medical Service isresponsible for analysing andauthorising the transport of sickpassengers, known as MEDA cases.Customers send their consultations ona form called INCAD, indicating thedetails of the person who is going to flyand sending the corresponding medicalreports to be studied by the company.The crew regularly receive thenecessary refresher courses in AircraftMedical Attention.

Similarly, any minors travelling withoutan adult (UM, unaccompanied minors)are accompanied at all times andtreated with special care. Iberia offersthis service to any passengers agedbetween 5 and 17 inclusive whenever ithas been expressly requested by theirparents or guardians.

Iberia takes all necessary measures toensure that these UM are never leftalone, from their handover by relativesor guardians to handover to thepersons taking charge of them onarrival.

CUSTOMERS

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Commitment to punctuality

Iberia establishes numerous internalcontrols to improve punctuality:specific rules, watchdog committees,cause analysis and decision-making,checking of operating processes, etc.

According to company figures, thepunctuality index at level 15’ was79.63% in 2012, 11.7% higher than thatrecorded in 2011.

Commitment to customersatisfaction

# Perceived Quality Level

Customer satisfaction is soundedout in Perceived Quality Level (PQL)Surveys, which measure theirassessment of the quality of servicereceived, on ground and in flight.

The surveys, done online, alsoinclude a free text section forcustomers to make whateversuggestions they may considerappropriate. The results of bothnumerical assessments andsuggestions are processed, codedand analysed to make decisions onwhich aspects of the service need tobe improved. The overall satisfactionlevel in 2012 was 7.17 out of 10,compared to 6.98 obtained in 2011.

CUSTOMERS

WE INTRODUCE THE FAMILY PASS

In 2012 Iberia introduced the “Family Pass”, a new servicedesigned specifically for families travelling with children, whichfacilitates and expedites their transit through T4. The “FamilyPass” agent accompanies them to the “Fast Track” securitycheck point and from there to board their flight or to the areaassigned for such boarding. The “Family Pass” agent also

provides the family with all the information they need on services at T4: nursery,restaurants, shops, chemists, currency exchange points … and gives the children asmall welcome gift.

Customer satisfaction by market andclass (Global PQL 2012)

ShortHaul

MediumHaul

LargeHaul

Global

6.797.95

6.787.48

6.947.32

6.847.59

Tourist Business

5522

By asking its customers questions,Iberia also calculates the NetRecommendation Index (NRI) andthe Net Loyalty Index (NLI). Theseindexes focus on the futurebehaviour of customers, measuringtheir inclination to recommendIberia’s services and use them again.Being net indexes, their calculationtakes into account both customersdeclaring themselves “promoters” ofthe company and “critics”, therebyobtaining a more precise idea of theeffect on the company’s reputation.

The overall average of both indexesin 2012 was 6.75 for the NRI and 7.14for the NLI.As illustrated in thefollowing graph, these figures are animprovement over 2011.

# Obtained Quality Level

Compliance with the service qualitystandards set by the company issupervised by measuring theobtained quality level (OQL).

Through the methodologyestablished, agents have on-lineaccess to information on servicequality obtained in over 8,500assessments a year, analysing 300aspects related with the serviceprovided or customer service.

As a sample of the informationprovided, the following graph showsthe results of the measurements byservices in respect of the goal set.

CUSTOMERS

Evolution of the NetRecommendation Index (NRI) and theNet Loyalty Index (NLI)

6.666.75

6.977.14

2011 2012

NLINRI

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For each one, the aspects related withthe operating process,attention/attitude, image, physicalenvironment, service times and the

range and state of products andservices are measured. The overall OQLin 2012 was 8.7, 1.2% more than in2011.

CUSTOMERS

OQL: 2012 RESULTS BY SERVICES

OQL 2012 Goal

Check-inVIP Lounge

Boarding

BaggageDelivery

Technical Crew:Messages

CabinMaintenance

Cleaning& Staff

Catering

Claims Handling

Iberia.com

Iberia Plus

ConnectionsMadrid

Punctuality

In-FlightService

Serviberia

5544

Claims handling

The company considers customerclaims a valuable source of informationfor correcting faults and bringing ourservices in line with their expectationsand an opportunity to meet their needs.

To centralise relations with customersthroughout the network, Iberia’sCustomer Relations Department,whose claims handling service hasbeen certified under UNE-EN ISO9001:2008, manages the after-salesservice and passes customer feedbackon to the entire organisation.

CUSTOMERS

Iberia renewed its AENOR Certified Service N Mark for service quality and customersatisfaction management in 2012: in the measuring and monitoring of servicequality and customer satisfaction, communication and dissemination, claimshandling, analysis of customer expectations and Quality Plan.

IPAD FOR CHIEF FLIGHT ATTENDANTS

By early August, all Iberia’s chief flight attendants had an iPadwith company applications for in-flight service, providingdetailed, up-to-date information on all the passengers,thereby improving passenger services. Among other things,the iPad provides the chief flight attendant with a list of all thecustomers on board and where they are seated; indicateswhich are Iberia Plus customers and what kind of card theyhave (Platinum, Gold, Silver, Classic, Kids); indicates any

customers with special circumstances (wheelchairs, unaccompanied minors orspecial meals); includes a record of their recent flights and any incidents involvingthe customer; creates graphs on the boarding process and informs on the timewhen the aircraft is ready. All this information puts the chief flight attendant in amuch better position to anticipate passengers’ needs and offer a higher quality,customised service.

5555

Iberia Cargo offers its customerscapacity in the bellies of Iberia aircraft.With cutting-edge technology and usingiberia-cargo.com as its e-commerceplatform, it offers a modern, dynamic,efficient, secure service, guaranteeingthe carriage of its customers’ goods. Itcurrently provides this service foraround 100 companies.

This year Iberia Cargo joined theexclusive IATA Cargo 2000 groupconsisting of 60 companies in total,including the most important airlines,multinational agencies, handling firms,other transport enterprises andsoftware providers in the cargo sector.

The Cargo 2000 certificate warrantsthat Iberia meets the requirementsstipulated by that IATA programme in itsbusiness operations: from handlinggoods sent between airports to planningand tracking of those dispatches.Thetasks performed by Iberia Cargo toobtain that certificate include revising allits quality management processes andmanuals and development by IberiaSystems of its own software platform“CDMP Cargo 2000”, needed forexchanging information with the othermembers of the IATA programme. It was

assisted in this process by the Germanfirm Riege Software International,provider of the logistics firm Schenker,to check the adequacy of the platformdeveloped.

Apart from this distinction, Iberia Cargohas been certified under ISO 9001:2008since 2000.

IAG Cargo, formed by Iberia Cargo andBritish Airways World Cargo in 2011, hasreached a new landmark in theintegration of the Iberia and BritishAirways cargo businesses with thelaunching of its new internetwebsitewww.iagcargo.com.

The new website will provide customerswith a single point of contact with IberiaCargo and British Airways World Cargo,as well as offering information on theentire network of IAG Cargodestinations. IAG Cargo customers mayhave access to the combined flighttimes of both airlines, using the jointtracking tool to locate their shipmentsor find all the contact details of the salesand customer service departments ofIAG Cargo. Another function of thewebsite is the downloading of detailedinformation on the IAG Cargo products.

CUSTOMERS

b 4.3 IBERIA CARGO CUSTOMERSiberia-cargo.comiagcargo.com

5566

IAG Cargo has also launched a newapplication for SmartPhones, with

which customers can track goods sentwith Iberia (code 075) and BritishAirways (code 125), consult Iberia-British Airways combined flight timesand IAG Cargo contact details.

Iberia Mantenimiento is the leadingcompany in Spain in repair, hightechnology and modification of aircraft,and ninth in MRO worldwide. It servesthe Iberia fleet and also more than 100customers throughout the world:airlines on every continent, aircraft and

engine manufacturers, logistic supportand operational solutions for theSpanish Air Force, full maintenanceservices for other Spanish VIP aircraftand other types of military aircraft,among others.

CUSTOMERS

b 4.4 IBERIA MAINTENANCECUSTOMERS

iberiamaintenance.com

5577

It is certified by national andinternational agencies, including theSpanish Civil Aviation Authority,European Aviation Safety Agency(EASA) and the US Federal AviationAdministration (FAA).

Most of the improvements anddevelopments made in themaintenance area are pioneerinnovations on a national scale, and insome cases even on an internationalscale, designed for the service providedfor both own and third party aircraft.

The Iberia Maintenance Hangar inBarcelona, one of the largestinfrastructures built in Catalonia inrecent years, operates 24 hours a dayand reduces the response time forcustomer airlines in the event of aserious fault that cannot be solved onthe runway. The main beneficiaries willtherefore be passengers, for whom therisk of cancelled or delayed flights willbe reduced.

CUSTOMERS

Iberia Airport Services Services is theleading passenger and aircraft handlingoperator in Spain, present at almost allSpanish airports, providing services formore than 200 airlines, 74.2 millionpassengers and 320,968 aircraft.

Within the GAUDI [IntegralDevelopment Unified AirportManagement] platform, described inearlier reports, Iberia created a pioneersystem at Barajas airport in 2011 thatwill allow employees to obtain all theinformation they need using iPads,anywhere in the airport, in real time, sothat they can provide that informationto customers, foresee and forestallproblems and make the best decisionsat all times.

b 4.5 IBERIA AIRPORT SERVICESCUSTOMERS

handling.iberia.es

5588

# Passenger and cargo air transport:

j Joint venture agreement withAmerican Airlines and BritishAirways:For Iberia, this agreementrepresents a major breakthrough inthe consolidation of the sector, inwhich it plays an important rolefollowing its merger with BritishAirways. This agreement reachedits 2nd anniversary in 2012: intotal, the combined network of thethree airlines has 443 destinationsin 106 countries, with almost 6,277flights a day.

# Creation of Iberia Express:In order to guarantee thesustainability of its short andmedium haul flights and, therefore,secure the future of the company,Iberia decided to create a newwholly-owned company, whichstarted operating on 25 March 2012and since then it has been amongthe top five airlines operating atBarajas, with over one millionpassengers in its first six months ofactivity and a 93% punctuality index.

The airline, wholly-owned by Iberia,was created to compete efficiently

Iberia is committed to the sustainabledevelopment of its business and tointroducing and maintaining differentmanagement systems to generateconfidence and add value for the IAGshareholders in aspects related withcorporate responsibility. These systemsare described below.

For detailed information on theeconomic aspects of the Group, consultthe Annual Management and CorporateGovernance Reports on www.es.iairgroup.com

5. SHAREHOLDERS AND INSTITUTIONS


b 5.2 PERFORMANCE OF THE DIFFERENT IBERIA BUSINESSESIN 2012

5599

and sustainably on an increasinglycomplex market. Iberia Expresscontributes direct and connectingtraffic profitably to the parent,thereby supporting Iberia’s growth inlong-haul routes.

After creating Iberia Express, thegroup is able to offer its customersmore accessible prices with theservice quality and experience of theleading airline in Spain. Passengersthus enjoy the same benefits as theycurrently have when flying withIberia: operation at principal airports,Iberia Plus programme, VIP lounges,

in-flight service, Business class,multiple frequencies, connectingflights to over 100 destinations andthe safety offered by the company’smaintenance service, recognised asone of the best in the world.

# And also:Iberia helped to alleviate theproblems created when Spanair wentout of business in January 2012. Thecompany started up a contingencyplan in collaboration with the Catalanand national authorities to helptransport the passengers leftstranded.

SHAREHOLDERS AND INSTITUTIONS

6600

Iberia takes account of any potentialevent that could jeopardise theachievement of its objectives and hasdeveloped a complete RiskManagement System, through which allrisks are identified, assessed andcontrolled systematically. Furtherinformation can be found in the IAGAnnual Corporate Governance Report.

In accordance with its CorporateResponsibility Policy (see Chapter 1 ofthis Report), Iberia adopts a focus ofanticipation to guarantee thesustainability of its actions, throughintegrated management of thefollowing risks, which form part of thecompany’s Risk Map:

# Reputational: risks deriving from theperception that the differentstakeholders might have of thecompany’s actions in theperformance of its businessactivities.

# Environmental: risks deriving fromcompliance with currentenvironmental laws and any newregulations that may affect thecompany, such as the emissionstrading regulations.

# Social: risks relating to aspects suchas competitiveness of the differentprofessional groups within thecompany, attracting and retainingtalent, the occupational health of itsemployees and acceptance in thelocal environment.

Iberia also has several specific areasdealing with the management ofsustainability risks, which haveestablished different controls describedelsewhere in this Report.

The governing bodies of Iberia areregularly informed on the Risk Map andthe actions taken in respect ofCorporate Responsibility.

Iberia’s different internal controlsystems - budget control, managementcontrol and auditing - take risks offraud into account and are set up todetect such risks, both internally andexternally.

Iberia has been developing proceduresto prevent fraud in carriage documentssince 1991 and pays special attentionnowadays to credit card transactions,for which purpose it has set up a taskforce for the prevention of this type offraud.


b 5.3 RISK MANAGEMENT

b 5.4 FRAUD PREVENTION AND ANTI-CORRUPTIONMEASURES

6611

As a novelty in 2012, following thereform of the Penal Code companiesmay now be held liable for offencescommitted by their directors for theirown benefit or by any employee for not

taking due care and control. Iberia hastaken measures to ensure effectivemanagement of compliance andreputational risks, as summarised inthe following figure:

The company has a SecurityCommittee and a Fraud PreventionCommittee, which coordinateprevention measures and study anycases that may arise, of fraud or otherpossible unethical or criminal conduct.

The annual internal audit programmecontemplates analysis of all businessunits and makes random checks of thecompany’s territorial organisation,taking these risks into considerationduring the audits.

Iberia also participates in the Large CapTax Forum, created in 2009 for the

principal Spanish companies and theSpanish Ministry of Economy andFinance to meet and work together on acode of good practice for tax treatmentof complex operations in order to avoidtax conflicts.

The structure and functioning of thecorporate bodies of both Iberia and IAGare based on the latest rules andrecommendations approved in respectof Corporate Governance. Detailedinformation can be consulted in theAnnual Corporate Governance Report.


METHODOLOGIES RESULT

PREVENTIVECONTROLS

Culture of compliance

Internal control mapCrime prevention programContinuous monitoring processes

MINIMIZERISKS

MITIGATINGMEASURES

DETECTIVECONTROLS

Compliance inspectionsComplaints channel

6622

Iberia uses project management toachieve the objectives marked out in itscurrent Strategic Plan and, in the longterm, to achieve change, which isessential for the economicdevelopment of the company,satisfaction of its customers andprofessional development of itsemployees. Innovation is an inherentpart of the company’s culture andincluded in its declaration of vision,mission and values.

Therefore, any project geared atimproving processes, resource-savingand quality and which is new on themarket is an innovative project forIberia. This innovation is usuallyaccompanied by technological growth.

But innovation is not limited to projects;employees’ ideas and creativity are alsoconsidered innovation. Since 1999Iberia has had an employee recognition

programme that rewards employees forany ideas they propose that contributevalue to the organisation. The companyis currently relaunching thisprogramme, which will include acomputer-assisted management tool towhich all employees will have accessand where they will be able to proposetheir ideas, receiving feedback throughthe same channels on the state ofthose proposals. This platform, whichwill act as a meeting point and spacefor innovation (news, forums, focusgroups, campaign results, links, presslibrary, etc.) will also contribute towardsencouraging employees to becomemore involved in the InnovationProcess.

During 2012, Iberia has identified andmanaged more than 20 R+D+I projects,which will require investments of over20 million euro to put them intopractice.


b 5.5 INNOVATION MANAGEMENT

Every year, Iberia implementsdozens of projects of thisnature and many of them arerecognised as innovative bymeans of independentassessments or certificationsby different Spanish andinternational officialinstitutions.

CHANGE

Proyects

OBJETIVES

Strategic PlanMeasures

Managementsystems &continous

improvement

PRODUCTS

SERVICESCULTURE

PROCESSES

Innovation

6633

The company’s investmentsin communication,marketing and sponsorshipare in keeping with thestrategy marked out by thecompany and theirprofitability is analysedregularly, according topre-established control procedures.Iberia constantly monitors the bestbranding practices on the market toincorporate all those that conform tothe company’s Strategic Plan in itsdecision-making processes. The brandis diversified to distinguish the differentbusiness units – Iberia Maintenance,Iberia Airport Services and Iberia Cargo-, the sales and services channels -Iberia.com, Serviberia - and the frequentflyer programme – Iberia Plus-.

Iberia is an active member of theAssociation of Well-Known SpanishBrands, AMRE(www.marcasrenombradas.com), whichhas among its members more than 70well-known leading Spanish brands

from different sectors firmly establishedon an international scale with a vocationof permanence on foreign markets,which have joined forces to work on thedevelopment, defence and promotion ofSpanish brands.

Through its Cargo business, Iberia is amember of the Spanish Exporters andInvestors Club, which defends theinterests of Spanish companies in thechallenge of making their businessinternational.www.clubexportadores.org

During 2012, Iberia continued work on aproject to reposition its brand, involvingthe definition and implementation of anew brand strategy for the Iberia of thefuture.

With regard to corporate responsibility,innovation in Iberia contributestowards:

# Generating satisfaction and valueadded for our stakeholders.

# Sustainable development throughefficient use of resources: manyprojects aim to reduce consumption.

# Obtaining competitive edge in theperformance of our businesses.

Iberia has been awarded the "FutureTravel Experience" prize for the bestinitiative in passenger assistance. Thisis recognition for the different projectsdeveloped by the company to improvecustomer services with innovativesolutions both at airports and in flight.


b 5.6 BRAND MANAGEMENT

6644

Iberia considers its suppliers strategicstakeholders in its value chain, toguarantee supplies and obtain productsand services that meet the quality,safety and environmental standardsdefined by the company. Moreover,considering its suppliers an importantlink in the production process, Iberiareceives their support and cooperationto meet certain goals set for ourcompany.

In particular, Iberia cultured a veryspecial relationship with its suppliers in2012 in the application of theExpenditure Reduction Plan it had toimplement in order to cut costs.

Also in 2012, Iberia’s ProcurementsDepartment continued working towardsthe procurements synergy goalsidentified in the terms of the mergerwith British Airways. A number of jointnegotiation projects were put intopractice during this period from whichimportant operating and economicresults were obtained for Iberia and,therefore, the IAG Group.

Through the platform AdquiraMarketplace (Adquira, S.A, in whichIberia has a shareholding interest)Iberia has consolidated its “SupplierPortal” for electronic negotiations withsuppliers and as a means ofcommunication for e-invoicing. Thisyear Iberia doubled the amount of e-invoicing handled in 2011 through thisplatform.

In its contracts with suppliers, Iberiaimplemented Logalty this year as a toolfor the electronic signing of contracts,which has simplified the process,reducing the time spent on signingcontracts, enabling the company notonly to reduce space but also to make agreater contribution to improving theenvironment by eliminating paper.

The Quality Management System of theIberia Procurement Department hasbeen certified under the ISO9001:2008, the first in Spain toincorporate internal customersatisfaction in its procedures.

6. SUPPLIERS


Procurement Management Systems

Iberia procurement management isgeared towards achieving thecompany’s goals, regulated by internalrules and procedures and guided by thefollowing general principles:

# Internal customer satisfaction

# Compliance with the law

# Free competition

# Transparency and confidentiality

# Caution

Iberia also encourages all its suppliersto respect the codes of conduct andgood environmental practices. Thus,when tendering contracts it includes, inboth the bidding terms and conditionsand the contract proper, clausesconcerning:

# Confidentiality

# Industrial property

# Data protection

# Labour commitment

# Environmental commitment

# UN Global Compact

In addition, suppliers awardedcontracts for security and surveillanceservices undertake to impose limits onthe use of force in their activities.

Compliance with these clauses isregularly assessed on the basis ofmonitoring information, the risks towhich the company’s reputation isexposed and how critical the contract isfor the value chain.

6655

Iberia’s Quality System contemplatesthe continuous assessment of suppliersof critical products and services.

It also includes a procedure forhandling claims from internalcustomers following incidents in theservice provided. There is a

Procurement Incidents Portal forhandling incidents, through whichinternal customers can rapidly andsimply report any incidents or makesuggestions directly to the buyerresponsible for the procurementcontract.

SUPPLIERS

b 6.2 RESPONSIBLE PROCUREMENT

6666

As established in its controlprocedures, Iberia has establishedmaximum times for the payment ofinvoices, in accordance with theprovisions of the current Payments Act.Iberia’s healthy financial positionguarantees payment for the productsand services contracted and providedto Iberia’s satisfaction.

SUPPLIERS

b 6.3 SUPPLIER PAYMENT TOOLS

6677

In accordance with its CorporateResponsibility policy, Iberiaincorporates and contemplates respectfor human rights in its operations,based on the standards established inthe Universal Declaration on HumanRights, the eight Core Conventions ofthe International Labour Organization,

the United Nations Global Compact andthe Millennium Development Goals.

During 2012 Iberia started up theAVANZA Project, a transformationprogramme with which the companyaims to develop three essential goals:


7. EMPLOYEES

6688

Several initiatives were implementedduring 2012 focused on achieving thegoals indicated above:

# To renew the culture a culturediagnosis was made throughsurveys, focus groups and interviews,with the participation of individualsand groups from all levels of thecompany. The diagnosis reflected theexisting culture and aspirations forcultural renewal and was used as abasis for implementing the otherAVANZA measures.

Along these lines and focusing on theaspirations detected in the diagnosis,the company is working on thelaunching of a New Ways of Workingprogramme geared towardsencouraging collaboration and cross-functions, using the availabletechnological tools.

An Innovation Programme is alsobeing developed to promote aculture of continuous improvement,which will reward proposals fromemployees and will be set up during2013.

A new communication has beendeveloped, Canal Directivos, aimedat managers, to encourage cascadecommunications.

And a new leadership style has beendefined, with a new profile andspecific training.

# To implement a people-orientatedmanagement model all the humanresources policies and processeswere reviewed during 2012, adaptingsome of them to the renewed cultureand creating other new ones, such astalent and performance assessment,designed to encourage meritocracy.More precisely, the followingprocesses were designed:

j Performance managementj Management by objectivesj Talent managementj Company directoryj Training processj Recruitment process

The new processes will be included inthe PeopleSoft platform, where Iberiaalready has its payroll, with the aimof having an integratedmanagement tool.

The positions or roles in thedifferent areas have been identifiedand described within the frameworkof a new Classification Model forcompany employees in positions ofresponsibility, with a view tofavouring the development of a newmanagement, sound successionplans and mobility. This descriptionis based on key behaviour andabilities that assist management.

# Finally, with a view to stimulatingthe commitment of all Iberia

EMPLOYEES

6699

employees, initiatives have been putinto action such as job posting, theinternal publication of vacancies thatare not filled by succession plans;high potential, mentoring and

coaching programmes; and trainingand development programmes, themost prominent initiative in thisaspect being the creation of Iberia’sCorporate University.

The composition of the Iberiaworkforce as at 31 December 2012,broken down by countries, sex, labourcategory, business and type of contractcan be consulted in the Annexes to thisReport.

The company has employees inpractically all the countries reached byits commercial network. Thedistribution of employees by countriesis shown in the following map:

EMPLOYEES

b 7.2 WORKFORCE AND LABOUR RELATIONS

NUMBER OFEMPLOYEES

71 - 150> 150 41 - 70 21 - 40 1 - 20

7700

Union representation andparticipation

Iberia has two committees, the GroundStaff Inter-Workplace Committee andthe Flight Committee, which havecontinuous relations with the unions.There is also a Social and EconomicWatchdog Committee, in which theunions participate.

The ground staff union representativessit on 20 Workplace Committees(works councils) nationwide, and afurther 17 workplaces nationwide haveworkers’ delegates.

Internationally, Iberia has workers’representatives in 43% of the countriesin which it has employees and there arecollective agreements in: Argentina,Austria, Belgium, Brazil, Chile, France,Germany, Greece, Ireland, Israel, Italy,Mexico, Netherlands, Portugal, Sweden,United Kingdom, Uruguay andVenezuela; and union representatives inPeru (see Annexes).

Collective bargaining andemployment

On 30 October 2012, the company gavenotice of termination of the XIXCollective Agreement for Ground Staffand the XVI Collective Agreement forFlight Attendants, both valid up to 31December 2012. Consequently, asestablished in the Workers’ Statute,Bargaining Committees were set up in

both groups of employees, on 29November 2012 for Flight Attendantsand on 28 December 2012 for GroundStaff.

The Bargaining Committee for the VIIICollective Agreement for Pilots was setup on 24 November 2009 andnegotiated from then throughout 2010and 2011 with a view to reaching anagreement.

Owing to their disagreement with thecreation of Iberia Express, pilots werecalled to strikein December 2011 andagain on five more occasions fromJanuary to May 2012.

In spite of the agreements reached,STAVLA and two minority unionsrepresenting ground staff (CNT andCTA) joined forces with SEPLA withseveral strikes called between Februaryand May. In total strikes were called on38 days, although some of them werefinally called off. Operations continuedwithout incident on both days,complying with the minimum servicesestablished by the competentauthorities.

In an effort to put an end to the strikes,the Government proposed entering amediation process in March, which didnot end in agreement. In view of theimpossibility of reaching an agreementin the collective bargaining with SEPLAand the need to put an end to theprocess, the company decided toinstitute the process of pulling out of

EMPLOYEES

7711

the pilots’ collective agreement,although the process was suspendedwhen the Government decided toimpose a compulsory arbitration tosolve the dispute. The arbitrator passedan award on 24 May 2012, which wasreplaced by a new one on 21 December,after the National Court declared thefirst award null and void.

On 9 November 2012 theTransformation Plan was presented toall the unions in the company, whoserepresentatives had been called tocommence bargaining.

UGT, CCOO, ASETMA, USO andSITCPLA called 6 days of strikes forDecember, which were finally called offafter an agreement was reached at theSIMA (Inter-Confederation Advisoryand Arbitration Service) offices on 17December 2012 with the unionsindicated above plus CTA-Vuelo (andsubsequently endorsed also by SEPLA),and negotiations were resumed.

Employee satisfaction is mainlychannelled through the suggestionboxes available in IBPróxima andIBPersonas, through which employeescan express any observation, remark orconcern, even anonymously if they sowish. These suggestions are mostlyassessed and answered in less than 24hours, and those considered importantare published monthly, together withthe replies offered by the responsiblemanagement departments. In 2012,1,069 suggestions were answered.

The company makes regular pollsthrough IBPróxima to find out itsemployees’ opinions on matters ofgeneral interest, many of them related

with the meeting of their expectationsin connection with the services offered.

Employees are informed on Iberia’sgoals and results – strategic plan, stockexchange performance, punctualitydetails, significant milestones, etc. –permanently through IBPróxima, dailyon the company’s notice boards andmonthly through the magazineIberavión.

During 2012 IBPróxima was immersedin improving its publishing tools to beable to incorporate new contents:search engines, news commentaries,forums, digital encounters and buildingan intranet in line with the existing

EMPLOYEES

b 7.3 SATISFACTION, INTERNAL COMMUNICATION ANDMOTIVATION

7722

websites. A website in which the set-up,information and services are structuredso as to meet the needs of allemployees.

Also in 2012, as part of the AVANZAProject, a culture diagnosis was made

with interviews of 25 executives;surveys in which a sample of 3,600employees from all categories andlevels were invited to participate; and 11focus groups, in which 124 employeesparticipated.

EMPLOYEES

RENEW THE CULTURE OF IBERIA

0%

20%

40%

60%

80%

100%

Managers Rest of surveyed

Level of survey participation by collectives Attendees to Focus Groups by areas

G.D. ofProduction

Corporateareas

Commercialand clients

G.D. Maintenanceand Engineering

51%

13%

19%

17%

Survey data Focus Groups data

124 assistants

Participation of 90%

Sent to 3600 employees

Participation higher than 50%,unequal among groups.

CULTURE AND CHANGE

7733

This diagnosis, which expressed theemployees’ aspirations and was sharedwith all of them, has been used as thebasis for launching several initiativesthat have been implemented withininternal communications, such as thecreation of “Canal Directivos”, a newcommunication channel for managerswhich offers weekly information andcollects their proposals on proposednovelties. This communication channelis intended to be a basic tool forexchanging information on commoncontents among the different teams.

Iberia has established a staffrecognition system for all itsemployees, based on individual orgroup suggestions and recognition ofextraordinary actions. To stimulatecreativity and individual and groupefforts and as a basic factor incontinuous improvement, reward isgiven for the profitability obtained as aresult of a proposal for improvement.This system is being revised with theintention of launching a renovatedprogramme geared towards the strivingfor continuous improvement andinnovation as the backbone of theIberia culture.

The company uses several forms ofincentive through different variable pay

items added to the salary, regulated bycollective agreement and rewardingemployee productivity: bonuses forattendance, shift work, duties, etc. Thelevels of progression and promotion arelinked to the Performance Assessment,made regularly.

Employee Services: IBPersonas

IBPersonas is a customisedmanagement tool through whichemployees have permanent access toan ever-growing quantity ofadministrative and managementinformation, on a self-service basis. It isdivided into channels, includingespecially those of training anddevelopment –management ofemployee training and access toCampus Iberia–, employment –accessto information on job vacancies, to befilled internally and/or externally–,employee self-service –performanceassessment, wages & salaries,donations to charity causes deducteddirectly from salary, etc.–, mIBillete.free–self-issuing of tickets for employeesand beneficiaries–, occupational hazardprevention –access to documents onhazard prevention, participation andconsultation, FAQ’s, etc.–, informationand management services for seniorstaff.

EMPLOYEES

7744

EMPLOYEES

ÁGORA PROJECT

One of the mainstays of the Ágora project is spreading throughout the company thepassion for excellence at the hub and internally sharing the goal of making T4 one ofthe best airports in the world.

To achieve this, the Human Resources Department has been working since theproject began on trying to improve mainly team work, internal collaboration, thesharing of ideas and active learning through the chain of command, in all units,using different formulas. In this regard, it has worked together with the MadridBarajas Airport Management on development of the briefing model for each area,defining its structure, contents, etc. An initial phase of briefing has alreadycommenced, becoming a structured, constant meeting point for communication inall areas.

We have also helped to define how we want to be perceived by our customers. Oneof many other initiatives is the Guidelines and Commitment training schemeprovided for all agents on excellent customer services. This initiative has beensupplemented with the Training on the Job project, seeking to train agents, with thehelp of supervisors, in the best customer service practices. The involvement andgood work of our employees is impressing our customers: the PQL (PerceivedQuality Level) closed the year 2012 at a cumulative 7.17, outstripping the targetwhich had been set at 7.10.

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The AVANZA project refocused theTraining and Development model torespond to the needs of a changingbusiness environment that requiresflexible, qualified individuals, promotethe corporate strategy and contributetowards employees’ commitment to thecompany’s values and culture.

# The first initiative set underway todevelop this model was the designingand development of Iberia’sCorporate University, Campus Iberia,the first activities of which took placein 2012 and whose operating modelwill be implemented in 2013.

With the aim of offering learning anddevelopment opportunities foreveryone who works in Iberia, theCorporate University provides aspace where knowledge can beshared and in which each employeereceives the training he/she needs tocontribute towards improving thebusiness results, in line with thecompany strategy and without losingthe global vision of the organisation.

Campus Iberia was set up to:

j Develop a style of leadership andmanagement of customers uniqueto Iberia which identifies us andmakes us different from our rivals.

j Create a meeting place tostimulate reflection and creativityand sharing the expertise and bestpractices of the company’sprofessionals.

j Boost the evolution we want toachieve.

j Foster the installation of newlearning technologies as a supportfor training and professionaldevelopment.

j Expand Iberia’s culture and values.

Campus Iberia defines adifferentiating learning model aroundthe following core themes:

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b 7.4 TRAINING AND DEVELOPMENT

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1. The principles of the model:

2. The methodology approach:It will boost e-learning to address theneeds of mobility and “just in time”learning of employees.

3. Tutoring model:Using the internal expertise of Iberiathrough the team of internaltrainers/tutors and strengtheningthe role of the manager in facilitatingtraining and the transfer orknowledge to the learning position.

4. Accreditation system:Incorporation of a credit system tobe able to prove adequate academicperformance of the training activitiesin Campus Iberia.

# The second major initiativepromoted was the launching of a newTraining Portal,IB-Learning, whichimproves the experience of theparticipant and fosters participationand collaborative learning.

This new learning environment willchannel…

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Companystrategiclever:

IBERIA CULTUREAND VALUES

Alignmentwith business:

IMPROVEMENT OFINDIVIDUAL ANDORGANIZATIONALPERFORMANCE

Professionaldevelopment:

INDIVIDUAL TRAININGPLANS

50% 30% 20%

e-learning Face to face Learningon the job

FORMAL LEARNING

Training required for each profileand person aligned with theTraining Plan and IndividualTraining Plan.

Allocated by the manager in thedetection of needs

COLLABORATIVE LEARNINGAND NETWORKING

Development that occurs byinteraction with otherprofessionals in Iberia

Social learning

KNOWLEDGE MANAGEMENT

Capitalize the internalknowledge, distributeit and enrich itcontinuously

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Allowing…

j Greater accessibility and visibilitythrough mobile devices

j Better communication: throughmessages sent between users

j Development of collaboration:through the existence of workinggroups at training centres

j Greater transparency: with accessto the most important news

j Sharing: encouragingcontributions to forums andgroups

j New learning channels: to accessbest practices

Training in Iberia includes bothspecialised training in technical skillsof the sector and the development ofskills and expertise to supportindividual and companyperformance. As every year, thespecific training and developmentplans have been defined based onthe strategy, goals and lines of actionof each of the management areas ofthe company.

# A third initiative was the creation ofthe Summer School, offering opentraining with English seminars andconferences for management andprofessionals of Iberia and thesector.

After the summer, giving continuityto the format and methods under thename Jueves Avanza, we extend thetraining offer, with monthlyconference cycles, which are open toall employees through intranet. Thistraining reaches Iberia’s entirenational and international networkvia streaming.

During 2012 Iberia provided a total of531,699 hours of training for itsemployees. Within its commitment tothe professional excellence of its team,11,558 courses were organised in thecompany in 2012, attended by a total of86,478 employees.

In short, Iberia has created aninnovative training model thatcontributes to making its professionalsmore employable, with a hugeinvestment in our growth and a learningplatform that give a broader coverageto all the company’s employees.

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Integration of education and business

Iberia has agreements with severalSpanish and international universitiesand training institutions, offering tocollaborate with the government andacademic institutions to implement theeducational system, both by adaptingvocational training modules specificallyfor the air-traffic sector and by offeringSpanish and foreign undergraduates,graduates and vocational trainingstudents an opportunity to acquirework experience. Some 244 studentsobtained grants in 2012.

The main objective of the GraduateWork Experience Programme is toadjust incorporations into themanagement and engineers group tothe demand of the different areas of thecompany according to the Strategic

Plan. It also helps to detect graduateswith potential and candidates forQualified Staff Development Plans.

The Graduate Work ExperienceProgramme was started up in 1996 andso far almost 65% of the employeesworking in the management andengineers group joined the companythrough this programme, either throughinternal promotion (contract novations)or from outside, through postgraduatescholarships.

Iberia also facilitates academic trainingfor employees who are studying forofficial qualifications, grantingIndividual Training Leave to enablethem to attend the correspondingcommitments and releasing them fromwork so that they can study or go toexams.

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Iberia maintains its collaboration withthe Autonomous Community of Madridto start up the Dual Vocational Training,in which one-third of the training isgiven in the secondary school and theother two-thirds directly through workexperience in companies, following theGerman model. In 2012, 20 first-yearpupils spent 4 months in the IberiaMaintenance facilities receivingtheoretical training and practicaltraining in hangars and workshops.

During 2012 Iberia participated in a newedition of the Recruiting ErasmusProgramme, an initiative that helps toattract and develop talent with multi-country experience for companies witha clear international vocation, such asours. This Programme is a goodexample of collaboration betweenuniversities and business and providescandidates with an excellent profile interms of qualities in high demand suchas a multi-cultural outlook, adaptability,flexibility and management of change,which these young professionals haveacquired in the course of theirexperience.

Attraction and retaining of talent

Iberia is constantly talent-spotting,both internally and externally,considering talent to be one of thecritical factors for guaranteeing thecompany’s competitiveness.

The company has established differentselection protocols and competence

profiles to detect the professionals withthe greatest potential in the company.Once spotted, those professionalsreceive support through PersonalTraining Programmes, ContinuousAssessment and VocationalDevelopment and Succession Plans,through which talent is channelledtowards the required field ofspecialisation or management, in thelatter case within specialised leadershipdevelopment programmes designed toguarantee a smooth take-over of all keymanagement and executive positions atall times, having professionals capableof applying their talent to thecircumstances required from time totime for the company’s business.

All these actions are reflected in theannual poll MERCO PERSONAS, whichin 2012 maintains Iberia among the top50 Spanish companies preferred foremployment; or in the rankingpublished by Actualidad Económica ofthe best companies to work in, whereIberia has risen 49 positions in the pastyear.

Within the initiatives of the AVANZAPlan, Iberia made a global talentreview in 2012 of all employees withpositions of trust within the company,with a view to guaranteeingmeritocracy in the management ofpeople and establishing IndividualDevelopment Plans suited to thestrengths and weaknesses of eachprofessional assessed.

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The process, called TalentManagement Review, will be annual asfrom this first review in 2012 andconsists of assessing the professionalperformance and potential of eachmanager for growth or performingother duties. It has led to a number ofactions for development of theassessed individuals, many of themunprecedented in the company:

# Launching of a High Potentialprogramme, selected among thosewith the highest ratings in the TalentManagement Review, creating aDevelopment Centre designed tosupport their professionaldevelopment. This was done for 60individuals in 2012.

# Launching of the first IberiaMentoring programme to provide

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career advice for people withpotential with the assistance of toplevel internal mentors. Thisprogramme also contemplatesCoaching initiatives whenever careeradvice by an external professional isconsidered necessary. This was donefor 30 individuals in 2012.

# Launching of an International Talentprogramme assessing the talent ofall persons with responsibilities in thecountries in which Iberia operates asa multinational, especially designedto adapt to their business featuresand logistics facilities. 125 individualsfrom the international network havebeen assessed.

# Launching of 360º assessmentprocesses to bolster thedevelopment programmes with toolsfor understanding each person’sperception of the professionalenvironment. 35 of theseassessments were launched in 2012.

Following the 2012 Talent ManagementReview, 332 Individual DevelopmentPlans (IDP) were prepared andapproved, supported by top-leveltraining given by the corporateuniversity, Campus Iberia, and alsoinvolving short, medium and long-termdevelopment targets in which eachprofessional assessed undertakes towork on improving or consolidatinghis/her performance and increasinghis/her potential, as appropriate.

The number of IDP will increase in 2013with those corresponding to theInternational Talent programme andthose of the new talent initiatives in2013, as described in the Future Actionssection of this chapter of the Report.

Another policy approved and started upby AVANZA in 2012, to support mobilityand equal opportunities in the internalfilling of vacancies in the company, isJob Posting. Vacancies, not only inIberia but also in the IAG Group, JBAand even some in British Airways, areposted each week indicating the jobprofile or characteristics, so thatanyone who believes he/she meets therequirements for a post can submit anapplication to be assessed by therecruitment services. Since April, whenthis initiative was begun, 40 selectionprocesses have been opened by JobPosting, enabling a total of 9 rotationsand 12 internal promotions, for the 23positions vacant in Iberia; and a further17 processes enabled Iberia employeesto opt for positions in IAG, BA and JBA.A total of 550 applications werepresented for these positions.

The Team Management andLeadership Programme is another ofthe initiatives promoted within theAVANZA project. The Human ResourcesManagement and Maintenance &Engineering General Management havejointly started up this Training andDevelopment programme aimed atSenior Technical Management Staff

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(GSGT1), MRO Engineers, Managers andSupervisors, who manage workingteams. This programme began on 18April 2012 and has a participation ofaround 300 employees. The generalpurpose, in keeping with the AVANZAproject, is to contribute towards changein the organisation in three basicaspects: culture, commitment andmanagement model.

Iberia also provides training for non-employees in the areas of airportservices, cargo, operations, in-flightservice and commercial, especially forcompanies contracted to provideservices to the company.

(1) GSGT (Grupo Superior de Gestores y Técnicos): workers with higher education or equivalent experience andknowledge performing highly complex technical work and having autonomy and responsiblity within that technicalspeciality.

Iberia’s Assistant Manager Hub and Coordination, Dimitris Bountolos, received the“Young, Talented Executives” award in the “operations” category in November2012. These awards are granted every year by Seeliger y Conde”, a leading firm inSpain specialising in executive talent spotting and development. The eight peopleselected for these awards are executives under 40 and the award is granted for theirprofessional track record.

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Iberia has a Code of Ethics forApplication of the Global Compact,designed as a direct, simple documentcontaining a set of good practices. Itlays down the bases for ethical,responsible conduct by Iberiaemployees in the performance of theirwork. The Code has been drawn up withthree essential goals:

# Adapt commitment to the GlobalCompact to the culture and values ofthe company, highlighting the mostimportant conduct in Iberia to ensurethat the principles are met.

# Have a general code of ethics tosupplement other codes of conductof the company.

# Inform all employees on the GlobalCompact.

One of the documents published in2012 was the General Procedure forData Security Awareness, the mainpurpose of which is to inform on thecompany’s policy regarding protectionof systems and the information theycontain, with specific guidelines for theuse of e-mail, the Personal DataProtection Act, and others. The GeneralCode of Conduct of the Iberia Groupestablishes the general rules governingthe conduct of company directors,executives and employees.

These actions supplement the rules ofconduct and ethical recommendationsalready existing in the company, suchas the Disciplinary Rules for CollectiveBargaining Agreement or the StyleGuide for customer services.

There is a “General Protocol for theHandling of Claims”, prepared by theRegulatory Compliance Unit, explainingthe procedures for making thenecessary analyses.

The following actions were significant in2012:

# Creation of a specialise unit tohandle the company’s anti-corruption policy.

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b 7.5 ETHICS AND CODES OF CONDUCT

E-MAIL USE

PROTECTION OFPERSONAL DATA

THE MANIPULATION OFCOMPUTER EQUIPMENT

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# Publication of Iberia’s Code ofConduct.

# Creation of a whistle blowing channelaccessible by all employees andallowing anonymous reports.

# Specific anti-corruption training forkey positions.

# Internal regulations on RegulatoryCompliance, Bribery Laws andCorporate Hospitality.

# Continuous reporting to the IAGAudit and Compliance Committee inrespect of Iberia’s compliancepolicies.

# Coordination with British Airways onthe regulatory compliance policywithin the group.

Salaries in Iberia are establishedaccording to rank, seniority andposition, as marked out in therespective collective agreements, withno distinction on grounds of sex, raceor any other discrimination.

In pursuance of Organic Law 3/2007,three Equality Plans are beingnegotiated with the different unionrepresentatives within the collectivebargaining of the Company’s threeCollective Agreements: Ground Staff,Flight Attendants and Pilots.

The Equality Plan for Flight Attendantswas signed by all the unionrepresentatives in the EqualityCommittee in 2011.

The company thus complies not onlywith Article 45 of Organic Law 3/2007of 22 March for effective equality ofmen and women, but also withTransitional Provision Three of Part Oneof the XVI Collective Agreement forFlight Attendants.

The company has suggested to theunion representatives of Pilots that theEquality Plan be negotiated within thebargaining of the VIII CollectiveAgreement, currently in progress.

In accordance with the Ground StaffCollective Agreement, the Committeewas set up on 13 March 2008 to drawup an Equality Plan. In the first phase,an external auditor was engaged to

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b 7.6 EQUAL OPPORTUNITIES AND DIVERSITY

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diagnose the situation and, based onthat diagnosis, Committee meetingshave been held to negotiate theEquality Plan, no agreement havingbeen reached so far.

The total percentage of women in thecompany at 31 December 2012 was37.9%, two tenths above the proportionin 2011.

At the end of 2012, 385 employees heldsenior positions in the company, 121 ofwhom were women, 31% of the total.

As regards diversity, the company has apolicy of hiring local personnel, suchthat, apart from a few positions withinthe structure of some commercialmanagement areas, which are held bypeople sent from Spain, 781 employeesof the company are nationals of thecountries in which Iberia operates as amultinational, 49.3% of whom arewomen.

Reduced working hours for legal custodyhave been applied within the company topromote childbirth and protectmaternity, paternity and care of theelderly, which benefits were taken up in2012 by a total of 1,904 employees.

The company takes account of the risksthat employee’s work may entail forpregnancy and breastfeeding, especially

among the flight groups, permittingdifferent possibilities for reducingworking hours, temporary suspensionsof contract and the processing ofbenefits, all regulated by collectiveagreement. Moreover, in 2011 a new typeof reduction came into force under theFlight Assistants Collective Agreement,raising from 8 to 11 years the age ofchildren for which reduced working

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b 7.7 WORK-LIFE BALANCE POLICIES

60-64

50-54

40-44

30-34

<25

0 500 1,000 1,500 2,000 2,500

Men Women

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hours can be requested for custody. In2012, 107 flight attendants applied forthis reduction.

The company offers a free service foraccompanying minor children of

employees on Iberia flights, which isprovided for children aged between 5and 11 travelling alone.

Iberia has its own Prevention Servicewith Senior Occupational HazardPrevention Officers covering the fourdisciplines of prevention: Safety atWork, Industrial Hygiene, Ergonomicsand Psychosociology and IndustrialHealth.

At 31 December 2012, in Iberia thereare 20 Ground Staff Health and SafetyCommittees, 1 Flight Staff Health andSafety Committee and 1 Inter-Workplace Health and SafetyCommittee for Ground Staff. As regardsDelegates, there are 71 Ground Staff

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b 7.8 HEALTH AND SAFETY AT WORK

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Prevention Delegates, 8 Flight StaffPrevention Delegates and 6 PreventionDelegates of the Inter-WorkplaceCommittee, and a further 17 Delegatesin workplaces which, because of theirsize, do not have a Committee, covering100% of the employees.

Every employee receives training foreach type of risk to which he/she maybe exposed. Moreover, IBPersonas hasa specific channel for occupationalhazard prevention, where employeescan consult details, recommendations,rules, manuals and other prevention-related documents, such as how toprevent muscular damage, employeeprevention obligations, etc.

The accident rate was further loweredin 2012 in all areas of the company by19.43%. The seriousness of accidentsat work was also reduced by 16.21%year on year. These trends show thatthe measures taken in respect ofprevention are adequate, encouragingthe company to continue along thelines defined in the Prevention Plan.

The main occupational hazards towhich employees are exposed areexcess effort and noise. In both casesconsiderable training is given and thetasks that may be performed arelimited if any incipient damage isdetected in an employee.

Laboratory management application

Development of the LaboratoryManagement Application wascompleted in 2012, in all its points:

One of the most interesting points isthe Agenda for reserving equipmentand the access by all members of thePrevention Service Unit to thedocuments of the equipment in use andthe incident section, so that they canreport incidents.

Another section is Documentation,which includes all documents referringto the equipment, calibration andverification certificates, operatingmanuals, instructions for use, technicalspecifications, etc.

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Acquisition of new laboratoryequipment

The frequency measurement modulehas been updated in the vibrationmeasurement equipment, with the mainaim of analysing in octave bands thevibrations given off by each tool to thehand-arm system and defining the mostadequate measure according to thefrequencies that could entail a risk toworkers’ health.

The HADA equipment (CAD AnalysisTool) was also acquired to enableadequate analysis of the ergonomicconditions in different jobs, therebyassisting in the ergonomic design ofworking equipment and places andtraining in “good practices”.

The purpose of the HADA system is tocapture and make a 3D analysis ofhuman movements in different jobs. It isbased on the use of inertial movementsensors, transposing these movementsto 3D biomechanical models.

With the information provided by thesensors during the field capture incombination with 3D animation software,it is possible to reproduce the worker’smovements in a biomechanical model tosubsequently make an ergonomicassessment of the musculoskeletalrisksderiving from the activity in question.

With the results from the studies,presentations are designed for use in thetraining of workers who need to usestrategies, positions and movements intheir job to prevent musculoskeletalinjury.

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Risk assessment strategies

# Management of noise exposure atwork

During 2012 the goal has been todefine the necessary measures tomake sure that employees’ realexposure to noise (i.e. the real noiselevel that the worker’s ear receives)in each job is always below levelsthat could cause loss of hearing.

The Prevention Service hasdeveloped a tool based on theassignment of “noise exposurepoints” for each of thetasks/activities performed in the job.It is the development of amethodology proposed in the non-compulsory Best Practice Guide forapplication of Directive 2003/10/ECof the European Parliament and ofthe Council on the minimum healthand safety requirements regardingthe exposure of workers to the risksarising from physical agents (noise),published in 2009.

Unlike previous years, as from 2012the noise level in jobs is calculated onthe basis of the noise level of eachtask performed and the exposureduration.

Measuring by tasks enables theassignment of “noise exposurepoints” for each hour of performinga given task or activity. Theadvantage of exposure points is thatthey are added arithmetically, suchthat the production units canorganise the work to guaranteeminimum exposure of theemployees to noise by means of asimple operation.

The minimum level of real exposureat work is also guaranteed bycalculating the noise exposure pointsreduced with the protection offeredby individual hearing protectorsmade available to employees.

Consequently, the information onnoise levels in jobs has beenmodified to include in all cases thereal noise exposure level and thetasks that require compulsory use ofindividual hearing protectors.

# Limits on noise exposure

The limits on noise exposure weremodified in 2012, introducing limitsrelated not only with ambient noisebut also with the real noise levelreceived by each employee (realexposure), taking account of thereduction of that noise exposure

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through use of individual hearingprotectors.

The adaptation of employeesaccording to Rule SH 205 is done inthese cases according to the noisescale of each particular job.

Noise exposure scales are alwayscalculated in the followingconditions:

j Without considering the reductionof exposure through use ofindividual hearing protectors. Inother words, the calculation ofexposure scales is based on thenoise level of each task.

j Considering the reductionachieved through use of individualhearing protectors (conventional

or with amplifier). In other words,real noise exposure scales,considering the use of hearingprotection in tasks with high noiselevels.

Each employee receives a scale card forhis/her particular job related with anylimitations he/she may have. Themanagement of each job in turn has ageneral card for the job, including thenecessary information to adaptemployees with any of the limitationsrelated with the noise in that job.

The scale cards for each job alsoindicate any tasks that may beperformed all day by any employee andthose requiring checks regarding theuse of individual hearing protectors ormaximum exposure duration.

# Solidarity Fund

The funds are used to meet socialneeds, such as aids for education,aids for disabled and chronically illchildren, welfare loans, expensesincurred through sickness, amongothers. This fund is jointly financed inequal proportions by the companyand employees, except in the case ofcabin crew, who contribute 0.40% of

their basic wage and the companycontributes a fixed sum.

# Ground and Flight Staff WelfareFunds

The company and each employeemake monthly contributions (50%each) through their salary to thepension scheme, handled byMutualidad Montepío Loreto, set up

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b 7.9 WELFARE BENEFITS

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as a private pension and welfareinstitution in 1970 by the workers inthe aviation sector. Loreto is anindependent institution, unrelated toany financial group, so itsinvestments are made exclusively toobtain the best, most secure benefitsfor its members. It operates under asystem of Individual Capitalisation,which means that the contributionsmade by members are used tofinance the benefits of each one andthat the distribution of profit is equalfor all participants.

This fund covers disability andretirement benefits. In the case offlight crew, it also covers long-termtemporary disability and deathbenefits.

#Group Life Assurance Policy

This assurance covers death andpermanent disability. In the case offlight crew, it also covers thecontingency of permanent loss oflicence. It is 60% financed by thecompany and 40% by the employee.

# Housing loans

Loans may be granted each year forup to 4% of the ground staff andflight attendants on the payroll at 31December of the preceding year.

# Medical cover

Iberia takes and manages allactivities and actions required for therecovery of workers who sufferaccidents.

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Iberia employees participate innumerous corporate citizenshipactivities, receiving logistic andeconomic support from the company.

The solidarity initiatives that employeeshave been working on for years have

given rise to the creation anddevelopment of two Associations,which have now been declared PublicUtility Associations and are among themost important in Spain:

b 7.10 CORPORATE CITIZENSHIP

montepioloreto.com

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# Iberia Employees Parents ofDisabled Children Association –APMIB

Set up in 1977 by company employeeswith children with special needs, thisassociation focuses its activities onthe protection and social integrationof physically, mentally or sensoriallyhandicapped children.

Twenty years later, in 1997, the APMIBFoundation was set up to provideprotection and social and educationalassistance for the handicapped. TheFoundation promotes and manageshomes and other centres for thedisabled who are orphans or in asituation of neglect, whatever their age.It also organises several trainingactivities and promotes research toimprove the lives of people with specialneeds.

It is now the second largest associationfor the disabled in Spain, after the ONCE[National Association for the Blind], withsix specialist centres in Barcelona,Madrid (2), Malaga, Las Palmas andTenerife. Its work is no longer limited torelatives of Iberia employees, but is opento the whole society.

APMIB has a human team of 611persons, 75% of which have some kindof functional diversity. Their mainoccupations are the manufacturing oftextile products, packaging & labelling,etc., computing and administrativecoordination services.

It has been supported by the companyfrom the outset, with monetarycontributions and work contractsawarded on a competitive basis.Approximately one-third of its turnover isobtained on sales to Iberia.

Apart from work for Iberia, the APMIBcentres perform activities and provideservices for more than 500 clients,including 2012 Acciona, Cepsa, Airbusand Aena.

The products and services offered byAPMIB to its clients are:

j Packaging, labelling, etc.

j Outsourcing services

j Gardening

j Laundry

j Stock management

j Documentary management

j Waste management

j Cleaning

Finally, in the area of assistance, theyoffer support services for thedevelopment of personal, social andlabour skills in disabled persons of allages.

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# Mano a mano

This NGO was founded in 1994 byIberia employees to use the freespace in the bellies of companyflights to send humanitarian aid tocountries hit by natural disasters orwars and deliver that aid withoutmiddlemen, i.e. “hand to hand”(“Mano a Mano” in Spanish).

It brings children from differentcountries, together with theirfamilies, to Spain on Iberia flights forspecialist medical attention. Once inSpain, Mano a Mano provides themwith accommodation and anythingelse they may need.

It also manages all sorts of aidprojects in developing countries.

Iberia donates air tickets and cargospace to Mano a Mano.

Iberia’s social activity, whichcomplements its solidarity andlabour responsibility actions, alsoextends to areas such as leisure,sport and culture. Club Iberia and the

Iberia Veterans Association areparticularly active in this area.

# The Veterans Association

was founded in 1972, has 8delegations in Spain and finances allits activities with the membershipfees of over 7,000 members, in 51meeting points in Spain and morethan 20 abroad. The servicesprovided and activities organised bythis Association are aimed primarilyat members on retirement, disabilityor widowhood pensions. Theactivities organised are mainlycultural, touristic and recreational.

# Club Iberia

Club Iberia is a non-profit associationthat aims to promote leisure andsports activities among companyemployees and their families, therebyfostering values such as the family,solidarity and teamwork. It currently

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manoamano.org.es

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has over 10,000 members and 12delegations nationwide. The ClubIberia budget is funded mainly withthe membership fees and an annualcontribution from Iberia, which also

provides premises for the Club’soffices and facilitates internalcommunication for all employeesthrough IBPróxima.

In pursuance of the Disabled PersonsIntegration Act, Iberia must hire anumber of disabled workers equivalentto no less than 2% of its headcount.Owing to the company’s complexproductive nature, it is especiallydifficult to incorporate disabled workersin a sufficient number to meet thatquota so the company meets its legalobligation through the alternativemeasures regulated by Royal Decree364/2005. These measures includecommercial contracts with SpecialEmployment Centres and donationsand sponsorships in favour of PublicUtility Associations.

Therefore, in 2012, the quotaestablished in respect of the totalheadcount was 438 persons, metthrough:

# lEmployment of disabled persons:the company provided directemployment for a total of 253disabled workers in 2012.

# Commercial contracts with SpecialEmployment Centres: a total of3,662,556 € was invoiced underthese contracts in 2012. This amountis equivalent to 164 workers.

# Donations and Sponsorships: in2012, the donations in cash or in kindmade to the above-mentionedassociations totalled 664,811€,equivalent to 30 workers.

Therefore, the number of disabledpersons employed by Iberia, directly orthrough alternative measures, totals447, exceeding the quota by nineworkers.

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b 7.11 EMPLOYMENT OF DISABLED WORKERS

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# Within the context of Iberia’sStrategic Plan 2012-2015 and withthe AVANZA project as the drivingforce for renewing the culture,implementing a people-orientatedmanagement model andstrengthening the commitment of allIberia employees, the followinginitiatives are to be started up during2013:

# 1. A second phase in TalentSpotting and Management,following the criteria ofmeritocracy and transparencyprevailing in the AVANZA project,to select candidates for amanagement career in thecompany, future managers tomaintain a reserve for successionin key positions within theorganisation; and for the projectmanagement career, new skillsrequired by the company to meetits challenges.

This initiative is an opportunity forprofessionals with potential whoare not in a position withresponsibility at present but areinterested in furthering theircareers with a view to becomingcompany leaders in the future.

# 2. Competence-based PerformanceAssessment. This initiative beganin 2012 and will be fullyimplemented in 2013 with thelaunching of a new performanceassessment process to adjust it tobest practices on the market andthe international standards ofcompetence-based management.Accordingly, a skills model hasbeen designed and will beapplicable at all levelsthroughout the company,beginning in 2013 with themanagement positions within theorganisation.

# 3. Start-up of a new rewards andrecognitions programmethroughout the company. The pilotprogramme will be run for theManagement of Madrid-BarajasAirport.

# 4. Launching of a project entitledNew Ways of Working, whichcontemplates the use ofcollaborative tools based on theuse of technology, allowing a moreflexible, across-the-boardapplication.

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b FUTURE ACTIONS

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# 5. Commencement of a newInnovation programme, scheduledfor the summer of 2013, as thedriving force of a cultural renewalaiming at continuousimprovement.

# 6. Creation of a corporatecitizenship programme scheduledfor the second half of 2013.

# 7. Launching of a pulse engagementsurvey, planned for the second halfof 2013.

# 8. Within Campus Iberia (CorporateUniversity), the creation of aCommercial School, with sixtraining itineraries: Sales,Marketing, Customer Experience,Network Design, RevenueManagement and ProductManager.

And the Project ManagementSchool, as a fundamentaldiscipline extended to technicalpositions and areas to become apractice applied across the board.

# 9. Launching, in early March, of IB-Learning, a new learning platformwhich will improvecommunication, enabling users toexchange messages, developcommunication, give greatertransparency to the mostimportant news, have forums andgroups in which information andopinions can be shared, givingaccess to “best practices”.

10. Implementation of personnelmanagement processes on theplatform PeopleSoft, for bothmanagers and employees, with theaim at all times of having anintegrated management tool.

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EMPLOYEES

# Moreover, within the Strategic Plan2012-2015, the cross-sectionaltransformation project Ágora will beimplemented within the Madrid-Barajas Airport Management. Fromthe point of view of human resourcesmanagement, further progress willbe made during 2013 towards apeople-orientated managementmodel, aiming to achieve outstandingmanagement at Madrid BarajasAirport in efficiency, punctuality andcustomer services, making this hub aworldwide benchmark.

# The project REDNOVA will belaunched in 2013, aimed at the entireairport network. It is atransformation project seekingexcellence in customer services atairports.

# Continue with the Negotiation underway of the Transformation Plan andCollective Agreements.

# Develop the Equality Plans inprogress.

# Continue to support corporatecitizenship actions undertaken byemployees.

# New IBPróxima: after two years’work the new intranet will see thelight in 2013 with a new generalfocus, design, structuring ofcontents, communication tools(forums, digital encounters, etc.),novelties and improvements, basedon the needs indicated by employeesthrough surveys, suggestions boxesand workshops, facilitating thecommunication and cultural changethat the company is putting intopractice.

9988

Iberia bases its social action strategyon supporting solidarity organisationsby assigning space in the bellies ofaircraft for transporting humanitarianaid and transporting passengersrequiring some kind of aid during theprovision of its regular services.

The company has an adequate controlsystem to manage its contributions,

enabling continuous assessment toadjust Iberia’s social actions to theestablished strategy. In this regardIberia steers its social actions so as tocontribute directly or indirectly towardsachieving the Millennium DevelopmentGoals established by the UnitedNations in 2000, contributing bothfunds and resources to solidarityprojects.

Iberia was the first airline in the worldto join MASSIVEGOOD, an initiative ofthe Millennium Foundation, which seeksto obtain additional financing to enableachievement of the three MillenniumDevelopment Goals related with health:

# Treat and combat life-threateningdiseases

# Reduce child mortality

# Improve maternal health

From 18 May 2011 to 28 February 2012,all Iberia customers making purchasesthrough www.iberia.com were given the

8. SOCIETY


b 8.2 CONTRIBUTION TO THE UNITED NATIONS MILLENNIUMDEVELOPMENT GOALS

9999

option of making a voluntary donationto this project. The funds collectedfrom the 7,113 customers who madedonations in a total of 40,808 eurowere given to the Children Without

Malaria Project, a campaign run by theSpanish Red Cross to prevent, diagnoseand treat this disease among childrenin Tanzania and Gambia.

Iberia’s contribution to the UN Millennium Development Goals:

The following table summarises other collaborations in 2012 related with theMillennium Development Goals, classified according to the goal to which theycontribute:

SOCIETY

Goals Target Main projects in 2012

Goal 1:Eradicateextreme povertyand hunger

Halve the proportionof people living onless than 1 dollar aday

j Collaboration with the canteen for 360children in Tablada de Lurin, one of thepoorest districts of Lima, in Peru. The aid tothe bakery is maintained.

j Sending of food and clothes to Pozo del TíoRaimundo, a people’s canteen project.

j Sending of food to the canteen of theWelfare Centre in Basakato, EquatorialGuinea. Food is also sent to the orphanageNuestra Señora de la Almudena inEquatorial Guinea.

j Collaboration with Hijas de la Caridad inSanto Domingo, providing assistance andfood for Los Hijos de la Calle; and with Hijasde los Sagrados Corazones, in the provinceof Barahona, to help with the Orphanagethey run in the Dominican Republic.

Halve the proportionof people who sufferfrom hunger

110000

SOCIETY

Goal 2:Achieveuniversalprimaryeducation

Ensure that, by2015, childreneverywhere, boysand girls alike, willbe able tocomplete a fullcourse of primaryschooling

j Collaboration with the bakery of the Tablada de Lurincanteen, panelling it to double up as classrooms andgive basic education as well as food.

j The school in Paraíso (Dominican Republic) wasopened in September 2012 for the beginning of theschool year. Forty-three Haitian children are receivingeducation there, improving the quality of education inthe isolated, less favoured communities of Las Lomas.It is also used as a refuge for hurricanes and as asocial and medical centre.

j Collaboration with the school Santo Tomás deValencia.

j Permanent collaboration with the schools Sampakaand Santa Teresita de Malabo with the aid of studygrants in Malabo, Luba, Batete and Basakato, amongothers, in Equatorial Guinea. And sending of schoolmaterial to Basakato, to be distributed throughout theentire area.

j Collaboration with Fundación Reina in Quito, Ecuador,for the integral development of children with Downsyndrome.

j Collaboration with a nursery in Chambo(Ecuador)with toy libraries and toys for individualchildren.

j PC bank: free transport of Amadeus PCs toeducational and welfare projects in Africa and SouthAmerica.

j Cooperation with the Social Integration SportsSchools of the Real Madrid Foundation.

Goal 3:Promotegenderequalityandempowerwomen

Eliminate genderdisparity inprimary andsecondaryeducationpreferably by2005, and at alllevels ofeducation by theend of 2015

j Collaboration with a mothers and girls shelterproject, teaching them to sew and use computers,in Equatorial Guinea.

j Sewing workshop in El Pozo del Tío Raimundo.

j Collaboration with Women Together projects.

110011

SOCIETY

Goal 4: Reducemortality inchildren under 5

Goal 5: Improvematernal health

Goal 6: CombatHIV/AIDS,malaria andother diseases

Reduce by two thirds,between 1990 and2015, the under-fivemortality rate

Reduce by threequarters, between1990 and 2015, thematernal mortalityratio

Have halted by 2015and begun to reversethe spread ofHIV/AIDS

Have halted by 2015and begun to reversethe incidence ofmalaria and othermajor diseases

j Mano a Mano transports children onIberia flights for surgery or medicaltreatment in Spain.

j Close collaboration with the SpanishLeukemia Foundation, to treat children inPeru, Ecuador and Guatemala.

j Sending hospital material to Annobon inEquatorial Guinea.

j Sending of medical material to theorphanage Nuestra Señora de laAlmudena in Equatorial Guinea.

j Collaboration with Make a Wish Spain.

j MASSIVEGOOD micro-donations project.

j Building of Accident & Emergency Centre inÑómalas, Chulucanas-Piura (Peru), foryoung pregnant women and newborns.



j Sending of medicines and hospital materialto hospitals in Equatorial Guinea (Basakato& Luba).

j Collaboration with the Drug Addiction HelpFoundation, with Basida and Remar Spain.

j Collaboration to build a shelter for terminalpatients in Basakato, Equatorial Guinea.

j Contributions to the National OncologyResearch Centre Carlos III and the DrugAddiction Help Foundation.

110022

SOCIETY

Goal 7: Ensureenvironmentalsustainability

Integrate the principles ofsustainable developmentinto country policies andprogrammes and reversethe loss of environmentalresources

Halve, by 2015, theproportion of peoplewithout sustainableaccess to safe drinkingwater and basic sanitation

By 2020, to have achieveda significant improvementin the lives of at least 100million slum dwellers

j See the Environment chapter ofthis Report.

j Collaboration with FundaciónMigres in its project forrepopulation of the fish eagle inDoñana.

j Collaboration with FundaciónNeotrópico to transport fourfemale white-eared titi monkeysfrom the Fauna Research andConservation Centre of theNeotropical Foundation in Tenerifeto El Karpín Aventura in Vizcaya.

Goal 8: Foster a worldalliance fordevelopment

Develop further an open,rule-based, predictable,non-discriminatory tradingand financial system

Address the special needsof least developedcountries

Address the special needsof landlocked developingcountries and small islanddeveloping States

Deal comprehensively withthe debt problems ofdeveloping countries

j Commitment to the GlobalCompact principles.

j Close cooperation with theSpanish International Cooperationand Development Agency (AECID).

110033

Permanent collaboration

Some of Iberia’s main permanentcollaborations with welfare institutionsand entities are listed below:

# Spanish International CooperationAgency – AECID:Iberia cooperates throughagreements, which include specialdiscounts for passenger or cargotickets on its flights.

# National Transplant Organisation:Iberia provides free transport oforgans on its scheduled flights. In2012 Iberia transported 60 organs.

# Make a Wish Spain Foundation:Iberia collaborates by providingtransport for sick children, who theFoundation takes to different placesto make their wish come true so thatthey recover their “desire to live”.

# Amadeus IT Group - “PC Bank”Project:Master agreement through whichAmadeus reuses the computers,amortised over no more than threeyears of use, of its 72 commercialsubsidiaries distributed throughoutthe world which their employees orclient travel agencies no longer use,to send them to countries in need.Iberia collaborates by transportingthe computers to their destinations.

In 2012 it transported more than 300kg for projects in Africa and SouthAmerica.

# Real Madrid Foundation for socialintegration through sport:Collaboration agreement throughwhich Iberia participates in thechildren and youth socialdevelopment and education projectsorganised by the Real MadridFoundation abroad: SocialIntegration Sports Schools of theReal Madrid Foundation. This yearIberia collaborated in theorganisation of the Corazón ClassicMatch 2012 to raise funds to buildschools in Africa.

# Encouraging children to do sport:Iberia and Coca Cola Españacollaborate in the organisation of in-flight drawing competitions forchildren under 12 travelling on Iberiaflights. The aim is to encouragephysical exercise among children.

In addition, through the IBPróximaSolidarity Projects Portal,information is given and voluntarycooperation is requested for severalwelfare projects and organisationspromoted by the employees,including: Accede a Respiro, NantikLum Foundation, Balia Foundationfor Childhood, My Attic, GloriaProject Association, Shelter andDevelopment Social Work, Yakaar

SOCIETY

b 8.3 PRINCIPAL COLLABORATIONS

110044

Africa Association, Spanish RareDiseases Federation (FEDER),Fundación alia2, etc.

The company belongs to severalassociations and foundations relatedwith Corporate Social Responsibility.

# Carolina Foundation:An institution set up in 2000,sponsored by Sogecable, PRISA,FCC, ACS, El Corte Inglés and Iberia,among others. It promotes cultural

relations and cooperation in scienceand education between Spain andthe countries of the South AmericanCommunity of Nations and othercountries having special historic,cultural or geographical ties withSpain.

www.fundacioncarolina.es

SOCIETY

V WEEK OF SOLIDARITY MAGIC

Iberia collaborated with Fundación Abracadabra de Magos Solidarios in the V Weekof Solidarity Magic in Madrid.

Fundación Abracadabra organises 5 days of intensive days of magic a year, in whichover 10,000 children, elderly and disabled enjoy the excitement of a magic show.With the aim of restoring their desire to live, the Foundation provides free solidaritymagic every year to those most in need of it: children in hospital, the elderly, thephysically or mentally handicapped and young people at risk of social exclusion.There are over a hundred solidarity magicians who, being totally dedicated to smallpatients and the most disadvantaged groups, give away the best medicine:excitement.

b 8.4 PARTICIPATION IN ASSOCIATIONS AND FOUNDATIONS

110055

# Exceltur:A non-profit association currentlyconsisting of 24 of the mostinfluential Spanish tourist businessgroups. This association endeavoursto foresee and adapt to processes ofchange required by the increasinglymore global and demanding markets,publishing surveys related to tourismand recommendations for the future.

www.exceltur.org

# Spanish Confederation of Business Organisations - CEOE:Iberia, through AECA, is a member ofthe Social ResponsibilityCommission of the CEOE along withother Spanish large enterprises andSME associations, set up as a forumfor encounter and debate to analyseCSR trends on the market. In turn, itrepresents its members in the StateCouncil on Corporate SocialResponsibility (CERSE) set up inFebruary 2008 and headed by theSpanish Ministry of Labour andImmigration.

www.ceoe.es

# SERES Foundation (ResponsibleBusiness and Society Foundation):This Foundation was set up as a CSRknowledge platform to serve as abenchmark for companies and other

social partners committed toimproving society, focusing mainlyon the integration in employment ofthe underprivileged.

www.fundacionseres.org

# House of America:Iberia collaborates with thisinstitution, set up in 1990 with themain purpose of generating a forumof ideas and debates on economic,political and cultural aspects of LatinAmerica.

www.casamerica.es

# Euroamerica Foundation:Promotes projects stimulatingcollaboration and understandingbetween Europe and Latin Americaand encourages dialogue betweenthe two continents.

www.euroamerica.org

# Latin America Quality Foundation:Iberia is a founding member ofFUNDIBEQ, which runs aManagement Excellence and QualityProgramme attached to the Ibero-American Summit of Heads of Stateand Governments, with theparticipation of major Spanish andLatin American enterprises.

www.fundibeq.org

SOCIETY

110066

Iberia’s direct investment in socialinterest groups during 2012,considering contributions in cash andin kind, totalled 0.6 million €. For thefifth year in succession, the companyhas also made contributions to externalenvironmental protection projects.

Investments in sponsorshiparrangements, that is, collaborationagreements with sports, cultural,educational, etc. organisations, 6.4million € in 2012.

The company sponsors at all timesinitiatives and events that are in linewith the values with which it identifies.

The company supports both thecreation and spreading of Spanishculture and its most representativeinstitutions, including the RoyalTheatre, Liceu in Barcelona or theFriends of the Prado MuseumFoundation.

SOCIETY

BOOKS FOR COLOMBIA

“Books for Colombia”is an initiative in which Iberia participated in 2012, aiming tosupply 70,000 textbooks and readers to Colombian children and teenagers with nomeans of support.

Iberia, the social network ideas4all and Telepizza ran this campaign, from 10January to 10 February, inviting people to donate books that were no longer in useand which were nevertheless in good condition for other readers to use.

b 8.5 RESPONSIBLE INVESTMENT

110077

SOCIETY

FRIENDS OF THE PRADO MUSEUM FOUNDATION

Iberia has been a corporate member of the Friends of the Prado MuseumFoundation since 2002, being the oldest, most constant benefactor of the museumwithout expecting anything in return. The Foundation has made major contributionsin donations of works of art, courses, publications, museum guides, educationalvisits, creation and publishing of an encyclopaedia of the Museum, exhibitions andeconomic aid for activities of the art gallery, among others.

Through its collaboration agreement with the Foundation, Iberia sponsors theSpanish version of the MASTERPIECES Guidebook and the company’s employeesbenefit from especially favourable terms for becoming Friends of the Museum.

110088

Preliminary clarifications

# The GRI 3.1 indicators are classifiedinto core and additional indicators.The former are those of interest forour company and most of thestakeholders. The latter represent aprominent, although not widely used,practice in measuring social,economic or environmental aspects,offer significant information for theinterested parties and may bechanged in the future to coreindicators.

# The standard GRI A+ meansinclusion of all the core indicators orexplanation of their omission. Thereasons for those not applicable tothe aviation industry or to Iberia areset out in the table Indicators NotApplicable.

# Iberia has also included someindicators complementing thoselisted in the GRI guidelines, version 3,in view of their importance in itsactivities and compliance with theprinciple of transparency expressedin said guidelines.

# The indicators published in thisreport cover all the areas andactivities performed by thecompany, with no limitation on thescope or cover of the report on thissubject. The adequatecomparability of the 2012indicators with previous years isalso guaranteed. Annual informationexpressed in percentages iscompared in percentage points (p.p.)

9. ANNEXES

b 9.1 CONTENTS AND INDICATORS ACCORDING TO GLOBALREPORTING INITIATIVE - VERSION 3.1

Guidelines basic contents and performance indicators index GRI 3.1

110099

ANNEXES

GRI Section

STRATEGY AND ANALYSIS

ContentsLocation in the Report or explanations

> CHAPTER Nº. > Section > Sub-section or ParagraphResponsible area

1.1 Chairman's statement Chairman's Statement> 2. STAKEHOLDER ENGAGEMENT > Public commitment

CORPORATERESPONSIBILITY &

ENVIRONMENT

ALL

HUMANRESOURCES

1.2 Description of key impacts, risks and opportunities> 0. ABOUT IBERIA> 1.OUR FOCUS ON RESPONSIBILITY> Impact analysis > 5. SHAREHOLDERS AND INSTITUTIONS

2.1 Name of reporting organisation IBERIA, L.A.E., S.A. OPERADORA, SOCIEDAD UNIPERSONAL

2.2 Primary brands, products and/or services> 0. ABOUT IBERIA > Iberia, Lineas Aéreas de España > 5. SHAREHOLDERS AND INSTITUTIONS > Brand management

2.3 Operational structure of the organisation> 0. ABOUT IBERIA > Organisation Structure> 1. OUR FOCUS ON RESPONSIBILITY > Corporate Responsibility Framework >

CR Organisation and Responsibilities in Iberia

2.4 Location of organisation's headquarters c/ Velázquez, 130 - 28006 - MADRID (ESPAÑA)

2.5 Countries where the organisation operates > 0. ABOUT IBERIA > Iberia, Lineas Aéreas de España > 7. EMPLOYEES > Workforce and Labour Relations

2.6 Nature of ownership and legal form SINGLE-MEMBER PUBLIC LIMITED COMPANY. Owned by the shareholdersof International Airlines Group (IAG)

2.7 Markets servedAir Transport Business: Spain, Europe, America, Africa and Middle EastMaintenance and Airport Services Businesses: Based in Spain, servingairlines throughout the world

2.8 Scale of the reporting organisation > 0. ABOUT IBERIA > Iberia, Líneas Aéreas de EspañaSee also indicators EC1 and LA1

2.9 Significant changes during the reporting period> 0. ABOUT IBERIA > Main achievements in 2012> 5. SHAREHOLDERS AND INSTITUTIONS > Development of the different Iberia

businesses in 2012

2.10 Awards received in the reporting period > 1. OUR FOCUS ON RESPONSIBILITY > Prizes and Recognitions obtainedin 2012

ALL

ORGANISATIONAL PROFILE

111100

ANNEXES

GRI Section

REPORT PARAMETERS

REPORT PROFILE


> CHAPTER Nº. > Section > Sub-section or ParagraphResponsible area

3.1 Reporting period 2012


ENVIRONMENT


ENVIRONMENT

3.2 Date of most recent previous report 2011

3.3 Reporting cycle Annual

3.4 Contact point for questions regarding the report [email protected]

3.5 Process for defining report content

> 1. OUR FOCUS ON RESPONSIBILITY > Corporate Responsibility Framework> RC Policy

> 1. OUR FOCUS ON RESPONSIBILITY > Impact analysis> 1. OUR FOCUS ON RESPONSIBILITY> External assessment

3.6 Boundary of the report IBERIA, L.A.E., S.A. OPERADORA, SOCIEDAD UNIPERSONAL

3.12 Location of standard disclosures in the report > CONTENTS> ANNEXES > A.2. GRI Contents and Indicators


ENVIRONMENT

3.7 Specific limitations on scope or boundary of this report > ANNEXES > Annex A.2. > Indicators not applicable

3.8 Basis for reporting on joint ventures, subsidiaries, etc. The indicators of this Report belong to Iberia L.A.E.Group information can be consulted in the IAG Group annual report

3.9 Data measurement techniques and the bases of calculation

3.10 Effect of any re-statements of information provided in earlier reports

3.11 Significant changes from previous reporting periods in the scope

The indicators are calculated using internationally accepted methods

There have been no changes in data or methods in respect of theprevious year

REPORT SCOPE AND BOUNDARY

GRI CONTENT INDEX

3.13 Policy and current practice with regard to seeking externalassurance for the report > About this Report

RESPONSABILIDADCORPORATIVA Y

MEDIO AMBIENTE

ASSURANCE

111111

ANNEXES

GRI Section

GOVERNANCE, COMMITMENT AND ENGAGEMENT OF STAKEHOLDERS


> CHAPTER Nº. > Section > Sub-section or Paragraph

Responsible area

4.1 Governance structure of the organisationBOARD OF DIRECTORS, Executive Committee, Compensation Committee,Safety Committeewww.iagshares.com

GENERALCOUNSEL &

SECRETARY OFTHE BOARD

4.2 Indicate whether the Chair of the highest governance body is also anexecutive officer Yes. www.iagshares.com

4.3 Number of members of the highest governance body that areindependent or non-executive members 7 of 14 (1 woman, 13 men)

4.4 Mechanisms for shareholders and employees to providerecommendations or direction to the highest governance body

General Shareholders' Meeting & Proxies. Department responsible forrelations with shareholders: [email protected]> 7. EMPLOYEES > Workforce and Labour Relations> Union representationand participation

4.5Linkage between compensation for members of the highestgovernance body, senior managers and executives and theorganisation's performance

DIRECTORS: fixed % of profit allocated in the previous yearSENIOR MANAGEMENT: Annual variable bonus by objectives

4.6 Processes in place for the highest governance body to ensureconflicts of interest are avoided

The current Corporate Governance regulations are those of IAG, which areapplicable to Iberia: Regulations of the Board and Code of Market Conduct www.iagshares.com (http://goo.gl/dijVi)

4.7

Process for determining the qualifications and expertise of themembers of the highest governance body for guiding theorganisation’s strategy on economic, environmental, and socialtopics

Proposal by the Board to the General Meeting, following report by the IAGNomination Committee: Regulations of the Boardwww.iagshares.com (http://goo.gl/dijVi)

111122

ANNEXES

GRI Section ContentsLocation in the Report or explanations

> CHAPTER Nº. > Section > Sub-section or Paragraph

Responsible area


ENVIRONMENT4.8

Internally developed statements of mission or values, codes ofconduct, and principles relevant to economic, environmental, andsocial performance

> 1. OUR FOCUS ON RESPONSIBILITY > Corporate Responsibility Framework >Corporate Responsibility Piolicy

> 7. EMPLOYEES > Ethics and Codes of conduct

GENERALCOUNSEL &

SECRETARY OF THEBOARD


ENVIRONMENT

4.9Procedures of the highest governance body for overseeing theorganisation’s identification and management of economic,environmental, and social performance

The Iberia Board approves the CR Policy.The CR information is assessed and approved by the Board, whereuponthe Annual Report is signed.

4.10 Processes for evaluating the highest governance body’s ownperformance

Compensation Committee: Regulations of the Board, art. 25 ap. 2www.iagshares.com(http://goo.gl/dijVi)

4.11 Explanation of how the precautionary approach or principle isaddressed by the organisation

> 1. OUR FOCUS ON RESPONSIBILITY > Impact analysis> 5. SHAREHOLDERS & INSTITUTIONS > Risk Management

ADVERTISING &SPONSORSHIP


ENVIRONMENT

4.12Externally developed economic, environmental, and socialcharters, principles, or other initiatives to which the organisationsubscribes or endorses

> 7. EMPLOYEES > Corporate citizenship> 8. SOCIETY > Millennium Development objectives

4.13 Principal associations of which the organisation is a member orwhich it supports

> 0. ABOUT IBERIA> 8. SOCIETY > Participation in associations and foundations

4.14 List of stakeholder groups engaged by the organisation

> 1. OUR FOCUS ON RESPONSIBILITY > Corporate Responsibility Framework> Stakeholders

> 2. STAKEHOLDER ENGAGEMENT> 3. ENVIRONMENT > Introduction table > 4. CUSTOMERS > Introduction table > 5. SHAREHOLDERS & INSTITUTIONS > Introduction table > 6. SUPPLIERS > Introduction table > 7. EMPLOYEES > Introduction table > 8. SOCIETY > Introduction table

4.15 Basis for identification and selection of stakeholders with whom toengage

4.16 Approaches to stakeholder engagement

4.17Key topics and concerns that have been raised through stakeholderengagement, and how the organisation has responded to them throughits reporting

GOVERNANCE, COMMITMENT AND ENGAGEMENT OF STAKEHOLDERS

111133

ANNEXES

Direct economic value generated and distributed (NB: recurring operating revenues in million €)

Operating costs and employee compensation

This page

4,859 4,702MANAGEMENT

CONTROL

4,746

Minimum wage (in €)

Minimum wage IBERIA (in €)

Financial implications and other risks and opportunitiesfor the organisation’s activities due to climate change

ECONOMIC PERFORMANCE INDICATORS

GRICode

Type ofindicator Name of indicator

EC1 Core

EC2 Core

> 2. STAKEHOLDER ENGAGEMENT> Public commitment > Climatechange> 3. ENVIRONMENT > Climatechange


ENVIRONMENT

Location in the report 2010 2011 2012Variation

2012-2011(% or p.p.)

Responsiblearea

CHAPTER No. > Section > Sub-section or paragraph

Quantitative: 12 Mill. € of which 8. € Mill havebeen freely allocated. For the launch of Emission

Trading System in commercial aviation.

EC3 CoreCoverage of the organisation’s obligations deriving fromwelfare benefit programmes (NB: % of employeescovered)

> 7. EMPLOYEES > Welfarebenefits

HUMANRESOURCES100% (see also indicator LA3)

EC6 CorePolicy, practices, and proportion of spending onlocally-based suppliers at significant locations ofoperation

> 6. SUPPLIERS > Responsibleprocurement PROCUREMENT

The significant trading of goods and services isdone from Spain (procurement centralisation),

although this does not mean that nationalsuppliers are given priority (they compete on

equal terms)

EC7 CoreProcedures for local hiring and proportion of seniormanagement hired from the local community atlocations of significant operations

> 7. EMPLOYEES > Equalopportunities & diversity

HUMAN RESOURCES

The company has a policy of hiring localpersonnel in the countries where it operates as a

multinational. Approximately 50% of theexecutives are locally hired. The hiring of local

personnel abroad is governed by internalregulations. See Annex A.3. (Labour agreements

and union representation by countries)

EC8 CoreDevelopment and impact of infrastructure investmentsand services provided primarily for public benefitthrough commercial, in-kind or pro bond engagement

> 8. SOCIETY > Responsibleinvestment


Monetary donations social interestgroups 0.6 Mill. €.

In kind contributions to social interestgroups 1 Mill. €.

In kind contributions sponsorshipagreements 6,4 Mill. €

EC9 Core Understanding and describing significant indirecteconomic impacts, including extent of impacts

> 1. OUR FOCUS ONRESPONSIBILITY > Impactanalysis

Qualitative

IBERIA INDICATOR Environmental costs and investments This page18 millones Mill. € in environmental expenditures

and 1 Mill. € in investments in tangible fixed assets

EC4 Core Significant financial assistance received fromgovernments This page


ENVIRONMENT

EC5 AdditionalHUMAN

RESOURCESRange of ratios of standard entry level wage comparedto local minimum wage at significant locations ofoperation

This page


ENVIRONMENT

-3.2%

0 00 -

8,979.60 8,979.608,866.20 0.0%

15,240.93 15,545.7915,240.93 2.0%

70% 73%72% -2 p.p.

Operating costs 5,394 millon €Employee compensation 1,340 millon €

111144

ANNEXES

EN3 Core

EN16 Core

Fuel consumption (tonnes/year) 1,886,232 1,911,703 1,768,649 -7.5%

> 3. ENVIRONMENT > Climate

change

> 3. ENVIRONMENT > Local air

quality

Specific fuel consumption (litres/RTK) 0.394 0.395 0.396 0.3%

CO2 emissions (tonnes) for all Iberia flights 5,941,632 6,021,864 5,571,246 -7.5%

EN16 Core

NOx emissions in LTO cycles (tonnes) 2,110 1,959 1,672 -14.7%

UHC emissions in LTO cycles (tonnes) 148 127 101 -20.5%

CO emissions in LTO cycles (tonnes) 904 791 646 -18.3%

IBERIA INDICATOR Average age of fleet (no. years) 7.90 8.60 9.20 7.0%

ENVIRONMENTAL PERFORMANCE INDICATORS

FLIGHT OPERATIONS

GRICode


Location in the report2010 2011 2012

Variation2012-2011 (% o p.p.)

Responsiblearea

> CHAPTER Nº. > Section >Sub-section or paragraph


ENVIRONMENT

111155

ANNEXES

ENVIRONMENTAL PERFORMANCE INDICATORS

GROUND OPERATIONS

GRICode


Ubicación en la memoria2010 2011 2012

Variation2012-2011 (% o p.p.)

Responsiblearea

> CHAPTER Nº. > Section >Sub-section or paragraph

IBERIA INDICATOR

CARGO

CLASSIFICATION GROUND EQUIPMENT

> 3. ENVIRONMENT > Climatechange

> 3. ENVIRONMENT>Consumption of resources


ENVIRONMENT

EN3 Core

Diesel vehicles 28 27 28 3.7%

BOILER CONSUMPTION

> 3. ENVIRONMENT >Consumption of resourceGasoil C consumption (litres) 869,669 611,514 50,617 -17.0%

Electric vehicles 132 117 114 -2.6%

Diesel consumption (litres) 47,940 45,362 51,237 13.0%

EN4 Core Electricity consumption (J*109) 8,967 6,681 7,369 10.3%

EN8 Core Water consumption (m3) 3,398 1,784 1,715 -3.9%

EN1 Core

EN3 Core

Paper consumption (tonnes) 27.5 29 27 -6.9%

HAZARDOUS WASTE MANAGEMENT (fluorescents, toner, batteries, oil filters, impregnated absorbers, etc.)EN24 Additional

Generation (tonnes) (1) > 3. ENVIRONMENT> Waste 3.92 4.23 1.70 -59.8%

URBAN WASTE MANAGEMENT (paper/cardboard, glass, wood, organic)EN22 Core

Generation (tonnes) > 3. ENVIRONMENT > Waste 200 180 147 -18.1%

AIRPORT SERVICES

CLASSIFICATION GROUND EQUIPMENT

Diesel vehicles 2,675 2,737 2,366 -13.6%

IBERIA INDICATOR Petrol vehicles > 3. ENVIRONMENT > 22 5 16 220.0%

Electric vehicles Climate change 352 344 307 -10.8%

EN3 Core Diesel consumption (litres) 4,441,737 4,055,103 3,763,338 -7.2%

EN4 Core Electricity consumption (J*109) 29,003 25,947 26,786 3.2%

EN8 Core Water consumption (m3) (2) > 3. ENVIRONMENT > 40,652 31,215 24,463 -21.6%

EN1 Core Paper consumption (tonnes)Consumption of resources

79 66 68 2.8%

AdditionalHAZARDOUS WASTE MANAGEMENT (oils and filters, solvents, batteries, shoes, polluted absorbents & containers, cutting oils, antifreeze,decanter sludge, fluorescents, cells, etc.), including Vehicles Out of Use delivered to CARTEN4Generation (tonnes) > 3. ENVIRONMENT > Waste 253.6 130.9 127.9 -2.3%

CoreURBAN WASTE MANAGEMENT (paper/cardboard, glass and packaging, pallets, etc.)

EN22Generation (tonnes) > 3. ENVIRONMENT > Waste 254.12 303.99 254.70 -16.2%

(1) Reducción debido a mejora de proceso en la actividad de carga(2) Decrece debido al cambio de edifico en las Escalas de ALC y LPA y bajada de actividad general

111166

ANNEXES

GROUND OPERATIONS

GRICode



Variation2012-2011(% or p.p.)

Responsiblearea

> CHAPTER No. > Section >Sub-section or paragraph

INDUSTRIAL AREAS - MADRID

CORPORATE RESPONSIBILITY &

ENVIRONMENT

FUEL CONSUMPTION IN BOILERS

EN3 CoreNatural gas consumption (kWh) 86,633,127 67,804,850 67,731,297 -0.1%

Gasoil C consumption (litres) 12,022 133,740 108,761 -18.7%

EN4 Core TOTAL ELECTRICITY CONSUMPTION (J*109) 259,587 296,532 299,135 0.9%

EN8 Core TOTAL WATER CONSUMPTION (m3) 376,292 322,382 277,029 -14.3%

BOILER EMISSIONS IN INDUSTRIAL AREAS

EN16 Core CO2 (Tonnes) 18,742 12,718 12,425 -2.3%

USOS CRÍTICOS DE HALÓN

EN19 Core kg installed in equipment 6,795 6,516 6,268 -3.8%

kg used 51 59 54 -8.3%

EN22 CoreURBAN WASTE GENERATION (tonnes)(paper & cardboard, timber, not separated) 1,603 1,228 1,251 1.9%

HAZARDOUS WASTE GENERATION(washing water, paints, solvents, metals in

EN24 Additional solution, oils, polluted containers and absorbers, 14,479 1,041 991 -4.8%hydroxide sludge, residual kerosene,WEEE, etc.) (tonnes) (*)

EN19 Core Use of products containing VOCs in industrial areas (litres) 119,894 262,335 252,105 -3.9%

Urban waste management (%)

Re-use 0.0 0.0 0.0 -

Recycling 48.0 58.1 78.6 + 20 p.p.

Recovery 4.0 0.1 1.6 + 1 p.p.

EN22 CoreElimination 48.0 41.8 19.8 - 22 p.p.

Hazardous waste management (%)

Re-use 0.0 1.7 1.9 + 0.2 p.p.

Recycling 0.3 28.4 12.4 -16 p.p.

Recovery for energy purposes 3.8 38.6 28.1 -10.5 p.p.

Safe deposit 95.9 31.4 57.7 -25.6 p.p.

> 3. ENVIRONMENT >Consumption of resources

> 3. ENVIRONMENT >Climate change

> 3. ENVIRONMENT > Waste



> 3. ENVIRONMENT > Local air quality

COMMON TO ALL GROUND OPERATIONS

111177

ANNEXES

GENERAL ENVIRONMENTAL ASPECTS

GRICode



Variation2012-2011(% or p.p.)

Responsiblearea

> CHAPTER No. > Section >Sub-section or paragraph

> 3. ENVIRONMENT > Consumption of resources


ENVIRONMENT

ADVERTISING & SPONSORSHIP


ENVIRONMENT

EN2 Core Percentage of materials used that are recycled inputmaterials

EN6 AdditionalInitiatives to provide energy-efficient or renewableenergy-based products and services, and reductions inenergy requirements as a result of these initiatives


EN5 Additional Energy saved due to conservation and efficientimprovements (variation in specific consumption) -4.81% 0.23% 0.28% + 0.05 p.p.

EN7 Additional Initiatives to reduce indirect energy consumption andreductions achieved

> 3. ENVIRONMENT >Nature protection

EN13 Additional Habitats protected or restored

EN14 Additional Strategies, current actions and future plans formanaging impacts on biodiversity

EN17 Core Other indirect greenhouse gas emissions, by weight

151,202 124,600 91,780 -26.3%

EN21 Core Total water discharge by quality and destination (m3)

EN23 Core Total number and volume of significant spills 0 0 0 -

EN 18 Additional Initiatives to reduce greenhouse gas emissions andreductions achieved

> 3. ENVIRONMENT >Management focus

EN26 Core Initiatives to mitigate environmental impacts ofproducts and services and extent of impact mitigation

EN29 Additional

Significant environmental impacts of transportingproducts and other goods and materials used for theorganisation’s operations, and transporting members ofthe workforce

EN28 CoreEpisodes and fines deriving from breach of conventions,treaties, declarations and estándar ds associated withenvironmental issues

0 0 0 -

CONSOLIDATED MANAGEMENTREPORTEN30 Additional Environmental investments (million €)


18 millones Mill. € in environmental expendituresand 1 Mill. € in investments in tangible fixed assets

ee CO2 emissions inventory

See IB indicator (Average age of fleet) andindicators EN16 and EN20 for reductions

All effluent is treated in accordance with currentlegal requirements

These tables include information on thereductions achieved in the listed environmental

indicators from 2008 to 2012

The indirect emissions produced in Iberia areincluded in the indicators EN16 and EN20, and in

the CO2 emissions inventory

Iberia does not operate in protected spaces,yet it nevertheless engages in actions to protect

habitats, directly or through sponsorships

See indicators EN6, EN18 and EN26

See also innovative projects in Chapter>5. SHAREHOLDERS & INSTITUTIONS >

Innovation management

Owing to the peculiarities of the aviation sector,the applicable technical standards and prevailing

safety parameters, no recovered materials areused, only original materialss


> 3. ENVIRONMENT > Climate change

> 3. ENVIRONMENT > Management focus

111188

ANNEXES

Boilers and generator sets (natural gas) 20,053 12,995 12,515 -3.69% 0.93 0.65 0.65 -1.20%

Boilers and generator sets (diesel) 2,688 2,010 1,581 -21.32% 0.12 0.10 0.08 -19.28%

Vehicles owned or rented by Iberia(petrol) 23 3 21 554.73% 0.00 0.00 0.00 571.68%

Vehicles owned or rented by Iberia

(diesel) 12,032 10,989 10,223 -8.67% 0.56 0,55 0.53 -4.56%

Electricity consumption 22,895 24,961 29,533 18.32% 1.06 1.26 1.53 21.38%

Travel to work in private vehicle 16,246 14,943 14,566 -2.52% 0.75 0.75 0.75 0.00%

Travel to work by bus 7,821 7,194 7,012 -2.52% 0.36 0.36 0.36 0.00%

Travel to work by train/underground 4,654 4,281 4,173 -2.52% 0.22 0.22 0.22 0.00%

Total Scope 1 (direct emissions) 34,797 25,997 24,340 -6.37% 1.61 1.31 1.26 -3.95%

Total Scope 2 (indirect emissions) 22,895 24,961 29,533 18.32% 1.06 1.26 1.53 21.38%

Total Scope 3 30,323 27,891 26,693 -4.29% 1,40 1,40 1,38 -1,82%

Total (scope 1+2+3) 88,016 78,849 80,566 2.18% 4.08 3.97 4.16 4.82%

Total (including flight operations,

which are scope 1) 6,029,648 6,100,713 5,651.812 -7.36% 279 307 291 -5.21%

Directemissions(Scope 1)

Indirectemissions(Scope 2)

Other indirectemissions(Scope 3)

Totals

CO2 EMISSIONS INVENTORY ACCORDING TO GHG PROTOCOL METHODS

GHG ProtocolScope Types of emission

Emissions GEIs (tCO2

2010 2011 2012 Variation 2012-2011

Emissions per employee* (tCO2/employee)

2010 2011 2012 Variation 2012-2010

111199

ANNEXES

SOCIAL PERFORMANCE INDICATORS

GRICode



2012-2011 (% or p.p.)

Responsible area

INDICADOR IBERIA

LA1 Core

LA2 Core

HUMANRESOURCES

Total number of employees and averageemployee rotation broken down by agegroup and gender

LA3 Additional

Temporary employees enjoy the same welfare benefits as permanentemployees (medical assistance, access to grants, suggestion boxprizes, special payslips, meal vouchers and free tickets, amongothers)

> 7. EMPLOYEES > Welfarebenefits

Welfare benefits provided to full-timeemployees that are not provided totemporary or part-time employees, bymajor operations

LA5 Core

Spanish law contemplates cases in which minimum notice is requiredwhen the company makes a substantial modification of itsemployees’ working conditions. For the Job Posting the minimumperiod is one week.

Minimum notice periods regardingoperational changes, including whetherspecified in collective agreements

LA6 Additional

Percentage of total workforcerepresented in formal joint management-worker health and safety committees thathelp monitor and advise on occupationalhealth and safety programmes

LA4 Core Approximately 100%Percentage of employees covered bycollective bargaining agreements

Workforce at 31-12-12GroundFlightTOTAL workforce

Average seniority (years)Average age of workforce (years)Type of contract

PermanentPermanent part-timePermanent discontinuousPermanent partial retirementTemporary

16,009 15,782 15,309 -3.0%5,583 5,476 5,301 -3.2%

21,592 21,258 20,610 -3.0%17.33 17.86 18.46 3.4%

44.07 44.75 45.33 1.3%

18,499 18,252 18,056 -1.1%1,333 1,656 1,633 -1.4%

3 0 0 -168 250 142 -43.2%

1,589 1,100 779 -29.2%

INTERNAL ROTATIONtotal 1.09%

women 0.51%

men 0.57%

<40 0.46%

40-50 0.46%

>50 0.17%

EXTERNAL ROTATION

total 1.09%

women 0.51%

men 0.57%

<40 0.46%

40-50 0.46%

>50 0.17%

IBERIA INDICATOR

Percentage union affiliation (%)

Ground

Pilots

Flight attendants

72 73 68 -5 p.p.

100 100 100 -

32 32 35 +3 p.p.

100 % (22committees &107 prevention

delegates)


delegates)


delegates)

-> 7. EMPLOYEES > Health &Safety at Work

> 7. EMPLOYEES > Workforceand Labour Relations

> > 7. EMPLOYEES >Workforce and Labour

Relations

> CHAPTER No.> Section >

Sub-section or aragraph

112200

ANNEXES


GRICode



2012-2011 (% or p.p.)

Responsible area

> CHAPTER No.> Section >

Sub-section or aragraph

INDICADOR IBERIA

LA10 Core

LA11 Additional Qualitative

HUMANRESOURCES

Programmes for skills management andlifelong learning that support the continuedemployability of employees and assistthem in managing career endings

LA12 Additional 100%, regulated by collective agreement -% employees receiving regularperformance and career developmentreviews

LA13 Core

LA14 Core Salary is the same for men and women at the different employeelevels, regulated by collective agreements

Ratio of basic salary of men to women byemployee category

IBERIA INDICATOR

Equal opportunities

% Women

% Men

No. women in positions of responsibility

(Positions in organisation)

No. women on the Board of Directors

37.9% 37.7% 37.9% +0..2 p.p.

62.1% 62.3% 62.1% -0.2 p.p.

116 123 121 -1.63%

0 1 1 -

> 7. EMPLOYEES > Equalopportunities & ethnic

diversity

> 7. EMPLOYEES >Satisfaction, internal

communication &motivation

> 7. EMPLOYEES > Training &Development

Training: total no. courses

Training: total no. participants

Average hours by

employee category

Senior Managers & Engineers

Pilots

Flight assistants

Technical staff/Specialists

Administrative/Auxiliary Services

Work experience programm

Novations employee contracts

No. scholarships: graduates,

undergraduates, vocational training

No. people with work experience

contracts

LA7 Core

LA9 Additional 100% (See indicator LA6 )Health & safety topics covered in formalagreements with trade unions

Rate of absenteeism for ordinary diseaseand occupational accidentOccupational diseaseNumber accidents at or on the wayto/from work without sick leaveNumber accidents at or on the way to orfrom work with sick leaveNumber of days’ sick leave for accidentsat or on the way to/from workNumber of work-related fatalities

5.1% 4.9% 7.9% +3 p.p.

0 0 0 -

936 867 718 -17.2%

1,550 1,312 1,057 -19.4%

29,230 31,584 33,132 4.9%

0 1 (in itínere) 1 (in itínere) -

LA8 Core

Education, training, counselling,prevention & risk-control programmes inplace to assist employees, their familiesor community members regardingserious diseases (number of coursesgiven)

389 728 702 -3.6%

> 7. EMPLOYEES > Health &Safety at Work

11,497 12,504 11,558 -7.6%

82,510 97,060 86,478 -10.9%

21.2 29.9 42.3 41.5%

46.3 41.8 31.1 -25.7%

34.2 24.7 19.4 -21.7%

44.3 50.0 51.8 3.6%

13.5 14.9 17.0 14.3%

8 7 6 -14.3%

282 396 244 -38.4%

31 26 50 92.3%

112211

ANNEXES


GRICode



2012-2011 (% o p.p.)

Responsiblearea

HR1 Core

HR2 Core

Percentage and total number ofsignificant investment agreements thatinclude human rights clauses or thathave undergone human rights screening.

Percentage of significant suppliers andcontractors that have undergonescreening on human rights and actionstaken.

6. SUPPLIERS > Responsibleprocurement

100% (Iberia requires the inclusion of a number of clauses in itscontracts with suppliers, whereby the supplier undertakes “not toinfringe any of the principles established in the UN Global Compact, ofwhich IBERIA is a member, and to offer in the performance of its dutieseffective compliance with all obligations deriving therefrom”)

PROCUREMENT

HR3 Additional

Total hours of employee training onpolicies and procedures concerningaspects of human rights that are relevantto operations, including percentage ofemployees trained

7. EMPLOYEES > Training &Development

The content of training is not only related to the development of skillsassociated with the job, but also the alignment between that contentand the strategic goals of the company, such as respect for theenvironment and human rights. These aspects are addressed in allcompany management courses and in on-the-job training. Some 3hours' training a year is estimated for approximately 7,000employees. See also indicators HR6 and HR7

HR5 Core

Operations identified in which the right toexercise freedom of association andcollective bargaining may be atsignificant risk, and actions taken tosupport these rights.

None. See indicator LA4

HR6 Core

Operations identified as havingsignificant risk for incidents of childlabour, and measures taken to contributeto the elimination of child labour.

Iberia joined the UN Global Compact in 2004 and includes a clauserequiring compliance with its Principles in all its contracts

100%. See indicator HR2

HR7 Core

Operations identified as havingsignificant risk for incidents of forced orcompulsory labour, and measures takento contribute to the elimination of forcedor compulsory labour.

HR8 Additional

Percentage of security personnel trainedin the organisation’s policies orprocedures concerning aspects of humanrights that are relevant to operations

HR4 Core Total number of incidents ofdiscrimination and actions taken.

> 1. OUR FOCUS ONRESPONSIBILITY> Impactanalysis

> 6. SUPPLIERS >Responsible procurement

0 0 0 -

HUMANRESOURCES

PROCUREMENT

> CHAPTER Nº.> Section > Sub-

section or paragraph

112222

ANNEXES


GRICod



2012-2011 (% o p.p.)

Responsiblearea

SO1 Core

SO2 Core

Nature, scope and effectiveness of anyprogrammes and practices that assessand manage the impacts of operations oncommunities, including entering,operating and exiting the company

Percentage and total number of businessunits analysed for risks related tocorruption

SO4 Core Actions taken in response to incidents ofcorruption

> 3. ENVIRONMENT > Localair quality> 3. ENVIRONMENT > Noisein the vicinity of the airport

As a result of fleet renewal, actions in operations and environmentalmanagement systems implemented in the company, the impact ofoperations in areas around the airport, noise and emissions isreduced from year to year.

SO5 CorePublic policy positions and participationin public policy development andlobbying

> 2. STAKEHOLDERENGAGEMENT > Public

commitment

This page

Qualitative

SO3 CorePercentage of employees trained in theorganisation’s anti-corruption policiesand procedures

> 5. SHAREHOLDERS &INSTITUTIONS > Fraudprevention and anti-corruption measures

100% of employees with responsibility in internal management andbudget control: training on the job. Furthermore, the EthicalGuidelines for application of the Global Compact principles areaddressed to all employees.

There have been no significant cases in 2012. The obligations andactions to be taken in the event of breach are set out in the corporategovernance regulations and collective agreements.

100% 100% 100% -


ENVIRONMENT

> CHAPTER No. >Section > Sub-section or

paragraph

SO6 Additional

Total value of financial contributions andcontributions in kind made to politicalparties or related institutions, bycountries

0 0 0 -

SO7 AdditionalTotal number of legal actions for anti-competitive behaviour, anti-trust andmonopoly practices and their outcomes

0 0 0 -

> 4. CUSTOMERS >Passenger commitments >Commitment to passenger

rights

SO8 Core

Monetary value of significant fines andtotal number of non-monetary sanctions.(In million ?, total operating expenses inindemnities for passengers & baggage, inpursuance of Regulation (EC) No261/2004.

23 21 17 -19.05%

Total number of non-monetary fines 0 0 0 -

112233

ANNEXES


GRICode



2012-2011 (% o p.p.)

Responsiblearea

PR1 Core

Life cycle stages in which customerhealth and safety impacts of productsand services are assessed forimprovement, and percentage ofsignificant products and servicescategories subject to such procedures

> 4. CUSTOMERS >Passenger Commitments >Commitment to passenger

rights, Commitment to pricetransparency, Commitmentto passengers with special

needs

100% 100% 100% -

QUALITY &CUSTOMERRELATIONS


ENVIRONMENT

> CHAPTER No. >Section > Sub-section or

paragraph

PR2 AdditionalTotal number of incidents of non-compliance with regulations andvoluntary codes concerning health andsafety impacts of products and servicesduring their life cycle, by types ofoutcomes

0 0 0 -

PR3 Core

Type of product and service informationrequired by procedures and legislationand percentage of products and servicessubject to such information requirements

100%

> 4. CUSTOMERS >Passenger Commitments >

Commitment to QualityPR5 Additional

Practices related to customersatisfaction, including results of surveysmeasuring customer satisfaction

Qualitative


RISKS & SECURITY


ENVIRONMENT

> 2. STAKEHOLDERENGAGEMENT >

Communication channels >Ethical advertising> 4. CUSTOMERS >

Passenger Commitments

PR6 Core

Programmes for adherence to laws,standards and voluntary codes related tomarketing communications, includingadvertising, promotion and sponsorship

Qualitative

100% 100% -

> 4. CUSTOMERS >Passenger Commitments

PR8 AdditionalTotal number of substantial complaintsregarding breaches of customer privacyand losses of customer data

1 0 0 -

PR4 Additional

Total number of incidents of non-compliance with regulations andvoluntary codes concerning product andservice information and labelling, by typeof outcomes

23 21 17 -19,05%

PR7 Additional

Total number of incidents of non-compliance with regulations andvoluntary codes concerning marketingcommunications, including advertising,promotion and sponsorship, by type ofoutcomes

0 0 0 -

PR9 Core

Monetary value of significant fines fornon-compliance with laws andregulations concerning the provision anduse of products and services of theorganisation

0 1 0 -

> 4. CUSTOMERS >Management focus> 4. CUSTOMERS >

Passenger Commitments >Commitment to Quality and

Commitment to Health> 6. SUPPLIERS > Specificrelationships in the sector

112244

ANNEXES

INDICATORS NOT APPLICABLE

GRI Type of Name of indicator Reason

Code indicator

Responsible area

EN9 Additional Water sources significantly affected by withdrawal of waterThere are no significant impacts in Iberia. The water used byIberia is obtained exclusively from the local mains; no wellsor own withdrawal points are used.

EN11 Core

Description of land adjacent to or in protected areas or areasof high biodiversity value outside protected areas. Statelocation and size of land owned, leased or managed in areas ofhigh biodiversity value

Iberia does not operate on land in or adjacent to protectednatural spaces or areas of high biodiversity.

Moreover, Iberia does not represent a threat to the speciesincluded on the IUCN Red List and national lists, since thecompany’s operations are not performed in the habitats ofthese species. See indicator EN13.

Similarly, Iberia’s activities do not affect the water resourcesand related habitats. In addition, the company’s effluent isway below the limits established in current legislation.

This indicator is not applicable to air transport activities. Thisnotwithstanding, it is worth noting the resources saved throughthe issuing of electronic tickets, for both passenger and cargoservices, and the ground operation waste management, whichare described in the Environment chapter of this report.

EN12 CoreDescription of significant impacts of activities, products andservices on biodiversity in protected areas or areas of highbiodiversity value outside protected areas

EN15 Additional

Number of IUCN Red List species and national conservationlist species, with habitats in areas affected by operations, bylevel of extinction risk, indicating the degree to which thespecies is threatened

EN25 AdditionalIdentity, size, protected status and biodiversity value ofwater bodies and related habitats significantly affected bythe reporting organisation’s discharges of water and runoff

EN27 Core Percentage of products sold and their packaging materialsthat are reclaimed at the end of their useful life, by category

The international structure of the company performs exclusivelycommercial and administrative duties, so there are no materialimpacts in these aspects.

HR9 Additional Total number of incidents of violations involving rights ofindigenous people and actions taken

This indicator is not applicable to the activities of the company.The international structure of the company developscommercial and administrative functions exclusively in urbanareas, therefore no significant impacts on these aspects.

HR10 CorePercentage and total number of operations that have beenrevised or impact assessments in the area of ??human rights.

There have not been any complaints about human rightsHR11 CoreNumber of complaints related to human rights that have beenfiled, addressed and resolved through formal grievancemechanisms.

CORPORATE

RESPONSIBILITY &

ENVIRONMENT

HUMAN RESOURCES


SO9 Core Operations with significant potential or real negative impactson local communities.


SO10 CorePrevention and mitigation measures implemented inoperations with significant potential or real negative impactson local communities.

112255

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Documents

Iberia 2012 CORPORATE RESPONSIBILITY Report