IAG in €113m offer for Spain airline Vueling IAG has been in conflict with Spanish pilots union SEPLA over pay and conditions for the last year. Earlier this year the Spanish government appointed an arbitrator to help resolve the dispute but the situation has yet to be resolved. The botched arbitration process has resulted in uncertainty over IAG's ability to continue to grow Iberia Express. IAG said Vueling would remain independent but analysts believe IAG will use Vueling to provide short haul feeder traffic for Iberia's long haul network and to take advantage of its lower cost base. "The main obstacle to such a strategy would have been the fact that IAG does not control Vueling but clearly, this obstacle could be removed by buying the remaining shares," said Espirito Santo analyst Gerald Khoo. A takeover of Vueling would seem to offer a way of continuing the restructuring of Iberia's short haul operations while sidestepping the question of how the arbitration process relating to Iberia Express will move forward. While IAG holds 46pc of Vueling's capital, 23pc is held by international institutional investors, 13pc by Spanish investors and 18pc by minority shareholders. IAG, which plans to fund the deal using "internal resources," said shareholders representing 90 percent of Vueling stock would have to approve the transaction. It added that a deal would not need regulatory approval by the European Commission. Vueling shares in Madrid had risen 51pc to €5.84 from end-2011 until trading in the stock was suspended on Wednesday.