The owner of British Airways has forecast a big jump in profits this year as it benefits from the "remarkable" turnaround of Spanish carrier Iberia.
International Airlines Group, which was formed from the merger of the two airlines in 2011, posted operating profits of 1.39 billion euro (£1 billion) for 2014 after it returned Iberia to the black following many years of losses.
With lower oil prices also helping the performance, the operating profit of British Airways increased to 1.21 billion (£878 million) after it boosted capacity with the delivery of five additional Airbus A380s and four Boeing 787s.
The company said it expects further improvement from the two airlines this year, with group operating profits set to exceed 2.2 billion euro (£1.6 billion).
Fuel costs and emission charges fell by six per cent to just under six billion euro (£4.4 billion) last year and are expected to remain at a similar level in 2015.
The improved performance comes as IAG continues to drum up support for its £1 billion takeover offer for Irish carrier Aer Lingus.
Chief executive Willie Walsh praised the improvement at Iberia, which made an operating profit of 50 million euro (£36.3 million) last year compared to an operating loss of 166 million euro the previous year.
He said: "The airline's turnaround has been remarkable, both financially and operationally, and we're very proud of its achievement especially its strong cost discipline.
"In 2013 we said our intention was for Iberia to break even in 2014 and it has fulfilled that promise."
Iberia's restructuring saw 2,500 staff leave the airline under a voluntary redundancy programme, while salaries were reduced by between 11 per cent and 18 per cent. The group employs a total of 60,000 people, including at Spain's low-cost carrier Veuling.
Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers, said exposure to recovering economies such as the United States, UK and Spain was playing its part in the performance.
He added: "IAG has travelled a long way. A difficult acquisition of Iberia is largely behind it, whilst the group continues to outperform rival flag carriers such as Air France.
"Management outlook comments inject optimism, while hopes that Air Lingus can eventually be acquired remain high."
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules hereComments are closed on this article