Madrid (CNN) -- Unions at Spain's flagship airline Iberia began a second week of strikes on Monday, with 1,300 flights canceled and most passengers re-assigned to other flights.
Iberia and three smaller airlines that it provides with ground services -- Iberia Express, Vueling and Air Nostrum --- have been impacted by the action, an Iberia spokesman said.
Cabin crews, pilots and ground staff are protesting Iberia's plans for 3,800 layoffs, about 19 percent of the staff, and salary cuts for the remaining workers.
Iberia, which merged with British Airlines in 2011, has been trying to reduce its losses, which exceeded $350 million last year.
The strike began February 18, running from Monday to Friday, and Iberia said it lost about $19 million that week.
It expects to lose another $19 million during the second week of industrial action. A third week of strike is set to start on March 18.
Iberia says it has relocated 38,000 passengers to other flights this week, and is issuing refunds for another 2,000 passengers affected by the disruption.
Negotiations between the airline and the unions have stalled, despite Spanish government pressure and the appointment of a mediator. Unions are now threatening to extend the strike to the lucrative Easter Week, which they had previously said would be off limits.
"There could be a strike during Easter Week and there could be an indefinite strike every Monday and Friday," Manuel Atienza, of the General Workers Union (UGT), told CNN on Monday. "Those are among the possibilities being considered."
The Iberia spokesman, who by custom is not named, said just the threat of an Easter Week strike could cause flight and hotel cancellations in Spain's key tourism sector, which is already suffering from the nation's recession and economic crisis.
On February 18, the first day of the first strike, five people were arrested for going beyond a police line at Madrid's Barajas airport, the government said.
Since then, the police presence has been increased at the airport's Terminal 4, where Iberia and British Airways flights are based. A protest was planned there for later Monday.
Unions have criticized the downsizing of Iberia, which has already seen the elimination of flights from Madrid to Athens, Cairo and Istanbul. In April, Iberia will stop flying from Madrid to Havana, Santo Domingo, Montevideo and San Juan de Puerto Rico.
Unions say that Iberia has been suffering since 2011, as the junior partner in the merger, while majority shareholder British Airways has expanded.
Union leaders say the strikes are the biggest in Iberia's history, because they are the first time that all three units -- pilots, cabin crews and ground personnel -- have joined forces, and the first time so many days of action have been announced at one time.