As noted in the wiki, you can use AA miles to upgrade IB-marketed / AA-operated, but only from full-fare, which S of course is not.
The Iberia "using Avios"
webpage says "You can also use [Avios] to upgrade cabin class when you fly in economy (fares Y, B or H) with Iberia." So, same problem there apparently.
If you're talking about using
BA Avios, they only limit you to anything but "Q, O and G". So that might work.
You could call and ask to have the flights changed to the higher fare class and pay the cost difference, but you may well find that it would be cheaper to simply upfare to discount Business instead.