International Airlines Group said it was on track to meet its 2015 targets after reporting consensus-beating annual profits, boosted by British Airways’ strength and as it benefited from newly-acquired low-cost carrier Vueling.

The company, which also owns the Spain-based Iberia airline, swung to an operating profit of €770 million before exceptional items in 2013 from the €23 million loss it made in the previous year, a result which was ahead of an analyst consensus forecast of €765 million.

IAG’s underperforming Iberia business, which has dragged on group earnings since its formation in 2011, narrowed its operating loss by €185 million to €166 million in the year, in contrast to its profitable BA and Vueling units. The group said the narrowing loss showed its plan to turn Iberia around was working.

“The recent pay and productivity agreements between Iberia and its pilot and cabin crew unions are key to reducing the airline’s costs further and providing the foundation for profitable growth,” IAG’s chief executive Willie Walsh said, referring to a deal signed in February.

IAG, Europe’s No. 1 airline group by market value, in November raised its 2015 operating profit goal to €1.8 billion from €1.6 billion, citing savings from integrating budget carrier Vueling, which it took control of in 2013, improved margins at BA and a recovery at Iberia. (Reuters)