International Airlines Group has reported an operating loss of €23 million before exceptional items for the year to December 31st.

While British Airways made an operating profit of €347 million during the period, the group was hamstrung by Spanish carrier Iberia, which made an operating loss of €351 million.

Willie Walsh, IAG chief executive, said: “Last year was a year of transformation for IAG - we bought bmi and integrated it into British Airways and initiated our restructuring of Iberia.

“Our operating performance was solid and the €23 million loss before exceptional items was better than our guidance to the market.

There was a significant impact on the results from exceptional and non-operating items leading to a pre-tax loss of €997 million.

These items include provision for restructuring and impairment costs in Iberia and non-cash pension accounting requirements.

Revenue for the year was up 10.9 per cent to €18.1 billion, including €872 million or 5.4 per cent currency impact.

Passenger unit revenue for the year was also up 9.4 per cent, on top of volume increases of 2.8 per cent.

Walsh continued: ““We achieved synergies of €313 million in 2012, exceeding our €225 million target set at the beginning of the year.

“This is another excellent performance, in particular through higher than expected revenue synergies. However, we must not be complacent - while this trend must continue it needs to be hand-in-hand with structural change.”

Despite three months of negotiations between Iberia and its trade unions, no agreement has been reached on an initial restructuring plan.

Therefore, IAG has announced that Iberia will proceed with a 15 per cent cut in capacity and has started the formal collective redundancy process which will affect 3,807 jobs.