First quarter operating losses at British Airways and Iberia parent International Airlines Group deepened by more than €30 million.

This came in addition to the group taking an exceptional charge of €311 million, mainly relating to restructuring at the loss-making Spanish carrier.

IAG reported an operating loss of €278 million before exceptional items against a loss of €249 million in the same period last year.

The loss for the three months to March 31 was €38 million better than last year at constant currency levels, according to chief executive Willie Walsh.

Revenue was up by 0.5% to €3.94 million as capacity was trimmed by more than 2%. Fuel costs for the quarter dropped by 3.4% to €1.36 million.

Walsh said current trading was in line with expectations, with overall capacity set to fall by 1.8%, excluding newly acquired Vueling.

Reviewing the winter quarter, he said: “These results are encouraging with underlying revenue strength in strategic markets however while the first step towards restructuring Iberia has been taken, there is more work to be done.

“We are adapting capacity to demand and are reporting a strong group passenger unit revenue performance, despite 10 days of Iberia industrial action and the weak economic situation in Spain.

“Non-fuel unit costs have risen due to two short term activities which will benefit the group in the long term. Iberia cut capacity in the quarter however its reduction in headcount and labour costs began in earnest in April. British Airways has increased its headcount in advance of the new aircraft arriving this year.

“Following acceptance of the mediator’s proposal, we have provided a further €265 million of employee restructuring costs together with fleet stand-down costs within the exceptional items.

“Since our last results, IAG acquired an additional 44.66% in Vueling bringing the group’s total shareholding to 90.51% of the airline.

“We have also placed firm orders for 18 Airbus A350 and plan to convert 18 Boeing 787 options into firm orders for British Airways. Delivery slots for A350 and/ or Boeing 787s have also been secured for Iberia and these will be converted into firm orders once the airline has restructured and can grow profitably.

“The Civil Aviation Authority has announced its initial price proposals at London airports for five years from 2014.

“A proposed charge of RPI -1.3% at Heathrow means an actual increase of between six and 10% over five years at a time when Heathrow is cutting investment by 25%.

“There should be a real term cut in charges otherwise the CAA is rewarding Heathrow, already the world’s most expensive hub airport, for its inefficiency to the detriment of passengers.”