Spanish bank Bankia has sold its 12.1 per cent stake in International Airlines Group (IAG) to institutional investors for €675m, according to reports.

The move, which is being seen as a positive move for IAG, was part of a recovery plan agreed with the government and the European Union as the nationalised lender Bankia seeks to pay back a €24bn European bailout.

IAG was formed in 2011 following a tie-up between British Airways and Iberia, however losses at the group increased this year due to its troubled Spanish carrier.

The owner of Iberia and British Airways reported a net quarterly loss of 630m euros ($820m; £531m) compared with a net loss of 129m euros last year.

Iberia has been struggling amid the economic crisis in Spain and stiff competition from budget carriers.

IAG has been rolling out a plan to cut costs at its Spanish unit aimed at returning the company to a 600m-euro profit by 2015. Workers at the Spanish airline staged two strikes earlier this year over 3,000 job cuts.