British Airways parent IAG SA boosted third-quarter earnings 30 percent, aided by increased capacity at the U.K. unit and reduced costs at Spain’s Iberia.

Three-month operating profit before one-time items rose to 900 million euros ($1.13 billion) from 690 million euros a year earlier, London-based IAG said today. Analysts had predicted 912 million euros, based on nine estimates.

IAG has expanded BA to tap strong North Atlantic demand while slashing jobs and routes at Iberia as it seeks a 1.8 billion-euro operating profit by 2015. Europe’s No. 3 airline said full-year earnings will be 550 million euros to 600 million euros higher than last year’s 770 million euros, refining an earlier estimate for a gain of at least 500 million euros.

“We continued to grow capacity efficiently and both our non-fuel and fuel unit-cost performances were strong, with the latter boosted by the introduction of new, more efficient aircraft into our fleet,” Chief Executive Officer Willie Walsh said in an e-mailed statement. Madrid-based Iberia is benefiting from “strong cost discipline combined with the continued benefits of restructuring,” he added.

The Spanish unit posted a third-quarter quarter operating profit of 162 million euros versus 74 million euros a year earlier, IAG said. Walsh sealed the last of three pay settlements at the business in March, locking in more modest deals for pilots, ground-handling staff and cabin crew.

U.S. Focus

British Airways earnings climbed 27 percent to 607 million euros. The U.K. unit has added flights to Austin, Texas, while scaling up aircraft on flights to Washington and Denver as it taps trans-Atlantic demand, aided by a growing fleet of Airbus Group NV A380 superjumbos.

Barcelona-based discount arm Vueling SA reported a three- month profit little changed at 140 million euros.

Air France-KLM Group, Europe’s No. 1 carrier by passenger traffic, this week posted a 60 percent drop in operating profit to 247 million euros as a two-week pilot strike wiped 330 million euros from earnings, while warning that bookings this quarter have been weak as the economy stutters.

Deutsche Lufthansa AG, the European No. 2, cut its profit forecast for the second time in five months, saying that operating income next year won’t match the 2 billion euros previously forecast, though should be “significantly” beyond this year’s projected 1 billion euros.

With assistance from Kari Lundgren in London.

To contact the reporter on this story: Christopher Jasper in London at cjasper@bloomberg.net To contact the editors responsible for this story: Benedikt Kammel at bkammel@bloomberg.net Christopher Jasper.

Photo Credit: An British Airways Embraer 170 jets lands at Glasgow Airport. Mark Harkin / Flickr