Iberia recovery boosts IAG profits

A TURNAROUND at the previously struggling Spanish airline Iberia helped owner IAG double profit as its shares soared to a record high.

IAG, which also owns British Airways, reported a 2014 profit of £800m as cheaper fuel and better cost controls improved its balance sheet. It raised its 2015 profit forecast by more than 20pc to £1.6bn.

Iberia made an operating profit of £36m compared to an operating loss of £120m in the previous year and IAG chief executive Willie Walsh, pictured, said its turnaround was ‘remarkable’.

Although lower oil prices had improved costs, with fuel 32pc of the group’s cost base, he said a more fuel-efficient fleet also contributed.

But IAG’s £1bn bid to buy Irish airline Aer Lingus rumbles on as the Irish government, which owns a 25pc stake, has demanded further concessions, including assurances on jobs and prospects for growth. Yesterday Walsh said: ‘We will respond to the Irish government in due course. I will meet with trade unions.’

He added: ‘It is not a must-do deal. It is a nice deal but we will only do it on terms acceptable to us. It is a much bigger deal for Aer Lingus. Their ability to grow is enhanced by being part of IAG.’

Walsh said IAG valued Aer Lingus transatlantic routes and said he envisaged Dublin as a transatlantic hub if the deal went ahead.

Shares, which are up 18pc this year, rose 20.5p to 580p.