Spain is a very difficult country to do business. I read a recent report saying that it is more difficult to start a business in Spain than in most African countries. So you are better in Africa starting your business than Spain.
I can see the Iberia brand continuing but not the company. IAG will find it easier and more profitable to run the operation out of London with a base in Madrid. It may be that crews will not be based permanently in Madrid. It's difficult to understand how things work in Spain. Real power is concentrated in relatively few people. Most owe their wealth to Franco. Let me explain.
Spain is a relatively new convert to democracy, only having free elections in the mid seventies. Franco was a dictator, he and his cronies owned everything. There was no revolution, those who owned everything in Franco's time still owned everything after Franco died. The sons and daughters of those people still control Spain.
Look at the vast infrastructure projects that have helped push Spain in bankruptcy. These multi billion euro projects were instigated by local politicians. These local politicians normally came from local political and business dynasties, dynasties which have their origins in Franco's rule. They also sat on the boards of the small regional banks who lent money they did not have to finance theses projects. Contracts were given to companies which these people owned or had a direct interest in. If not the contract was given to a " friend". Billions were made and its still going on, Spain is still spending billions of borrowed money on projects it does not need.
In Spain jobs are awarded on who you know. It's about who daddy goes shooting with, about the correct golf club, the tennis club. These guys stick together.
If you talk to the over 50% of unemployed young people in Spain they are bitter about this, but seem to accept it.
So if you we're IAG, would you bother? Run the operation from a civilized country.