British Airways‘s struggling sister airline, the Spanish carrier Iberia, will return to full-year profit in 2014, according to parent company International Airlines Group.

Iberia moved into modest profit over the summer as IAG reported increased overall profits, bolstered significantly by its new acquisition, the Spanish budget carrier Vueling. While Iberia turned a profit of €74m (£61m) for the third quarter of 2013, in what is traditionally the busiest three months for airlines, Vueling contributed €139m at a startling margin of 25%.

Willie Walsh, the IAG chief executive, said Iberia’s improved performance came in the strongest quarter of the year. “However, the airline must continue to implement its restructuring plan and reach agreement on productivity changes to bring about long term sustainable profits and growth.” Walsh said Iberia would make a full-year profit in 2014.

Around 2,700 jobs at Iberia will go by the end of this year, with further redundancies stretching into 2015, as talks continue with unions.

BA made €477m, up more than €200m from the same period last year when revenue dipped during the 2012 London Olympics.

Vueling’s full quarter results were included for the first in the group’s accounts, sending IAG’s operating profit up to €690m. Walsh said that the Barcelona-based low-cost carrier had been very successful in both adding capacity and growing traffic, with more seats being filled even as available seats grew 22%.

Walsh claimed that Vueling was thriving due to being more efficient than rivals easyJet in costs and offering very different service to Ryanair. He said that in contrast to the Irish airline it had “a friendly image and friendly service culture”.

In an apparent reference to the analysis offered by Ryanair’s chief executive, Michael O’Leary, he added: “I don’t think that you could have achieved those results in an environment quite as weak as some people would have you believe,

IAG announced on Thursday that it has streamlined its management teams with BA and Iberia’s bosses leaving the IAG board to concentrate on running the individual airlines. BA’s chief executive, Keith Williams, will also become the airline’s chairman, while Iberia’s chief executive will likewise become chair of the Spanish airline. The current chairmen, Sir Martin Broughton and Antonio Vázquez, will step down from the respective airlines’ boards in January to continue exclusively in the roles at group level.

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