This was always going to happen. With the Spanish Economy spluttering away, the low cost airlines growing and the size of Iberia flight crew pay/ rigid T&C's.
The latest IAG results showed BA making profit and being able to push through price rises, but Iberia was struggling to do either of these. I can see all Iberia short/mediumhaul and maybe vueling as well, being incorporated into the new LCC that is Iberia Express
There is no food provided on Iberia shorthaul economy anyway so I guess the passengers will not notice any difference - I just wonder if IAG will do the same to BA and start a BA Express ?