Iberia CEO Rafael Sanchez-Lozano is to be replaced by Iberia Express CEO Luis Gallego, effective immediately.

In a statement, Iberia’s parent company said: “International Airlines Group (IAG) and Rafael Sanchez-Lozano have decided by mutual agreement that he will step down as chief executive of Iberia and from the IAG board with immediate effect. He will be replaced by Luis Gallego who is currently chief executive of Iberia’s subsidiary Iberia Express. Luis has joined the Iberia and IAG boards.”

The top management change follows a weak financial performance at the Spanish carrier and labor unrest over the airline’s restructuring plans. Sanchez-Lozano, who has led Iberia for three years, said: “The company is now entering a new phase and it is time for me to pass on the baton to my successor.”

New CEO Gallego will come across from Iberia’s Madrid-based short-haul subsidiary, Iberia Express, which he has headed since its launch in March 2012. Prior to that Gallego was chief operating officer of Spanish budget carrier Vueling—currently the target of an International Airlines Group (IAG) takeover approach.

“Luis Gallego has extensive experience across a range of international airlines,” IAG CEO Willie Walsh said. “He was instrumental as chief executive of Iberia Express in creating an airline that is a great success. It is profitable, punctual and popular with customers and has created 500 much-needed jobs in Spain. Iberia is entering its next transition phase and I have every confidence that Luis can return Iberia to profitable growth.”