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Soaring profits at BA owner IAG

Buoyant demand for British Airways transatlantic flights and the continued overhaul of Spanish carrier Iberia helped their owner to soaring quarterly profits.

International Airlines Group (IAG) hailed "strong" July to September results as pre-tax profits leapt to 606 million euros (£505 million) from 244 million euros a year earlier.

BA saw a 100 million euro (£83 million) sales "bounceback" from last year's London Olympic Games, which slashed demand for business flights from the capital.

Passenger numbers across the group leapt 35.2% to 21.3 million during the quarter from 15.8 million a year earlier, boosted by its acquisition of Spanish airline Vueling.

Falling costs and 6.9% growth in revenues to 5.4 billion euros (£4.5 billion) helped drive the profits boom.

IAG, formed from a merger of BA and Iberia in 2011, said its revenue growth next year will be driven by rising passenger volumes rather than yield, as it launches new BA routes and sees strong growth from Vueling.

The update lifted IAG's shares more than 3%, helping boost sentiment after the industry was hit by budget carrier Ryanair's recent profits warning - its second in as many months. The Irish airline is being forced to slash fares to stimulate demand.

Quarterly operating profits at BA surged to 477 million euros (£397 million) from 268 million euros a year earlier, driven by the strong London market, transatlantic flights and the recovery from the Olympics.

IAG is forcing through painful changes at Iberia, including cutting capacity by 15%, slashing pay and axing 3,100 Iberia jobs.

Profits at Iberia hit 74 million euros (£62 million) from just one million euros a year earlier.

Chief executive Willie Walsh said the group results were "strong", with an "improved" performance by Iberia.

But he added: "The airline must continue to implement its restructuring plan and reach agreement on productivity changes to bring about long-term sustainable profits and growth."

Vueling profits hit 139 million euros (£116 million), helped by a tourism boost at Barcelona where it has a strong presence.

IAG added trading is in line with expectations, and expects operating profits of around 740 million euros (£617 million) for the year.

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