Iberia and British Airways owner International Airlines Group said on Friday it would dismiss 4,500 workers as part of its restructuring drive at Spain's flag carrier Iberia.

The company, which plans to downsize Iberia's fleet by 25 aircraft, also said it would reduce salaries and set a deadline of January 31 2013 to reach an agreement with trade unions over redundancies, adding that it would further reduce capacity if no agreement was reached.

(Reporting by Clare Kane, Editing by Tracy Rucinski)