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British Airways (BA) owner International Airlines Group (IAG) has reported a big jump in annual profit and raised its forecast for 2015.

pre-tax profits of €828m (£601m) for the year to 31 December.

Profits were boosted by the use of new fuel efficient aircraft and what it called a "remarkable" turnaround at Spanish airline Iberia.

IAG's operating profits nearly doubled to just more than €1bn. It also raised its 2015 forecast by 20%.

Since the formation of IAG through the merger of BA and Iberia in 2011, Iberia has been undergoing a massive restructuring programme, with jobs and salaries being cut.

Last year, Iberia made a further 1,427 redundancies following negotiations with trade unions in Spain, taking the total number of job cuts in recent years to 4,500.

But the airline reported an operating profit of €50m, compared with an operating loss of €166m last year.

Mr Walsh called Iberia's turnaround "remarkable, both financially and operationally" adding he was "very proud of its achievement especially its strong cost discipline".

"In 2013 we said our intention was for Iberia to break even in 2014 and it has fulfilled that promise," he added.

He added he expected Iberia to continue to improve its profitability given the trajectory that it is on. "The performance to date for Iberia has been tremendous and we expect that to continue in 2015," he said.

Shares in IAG rose almost 5% to 586.50p on the London Stock Exchange.

In addition to BA and Iberia, IAG also owns Spanish low-cost airline Vueling.

IAG said all three of its airlines faced very competitive markets domestically and across Europe from "the growing presence of low-cost carriers".

BA reported an operating profit of €1.2bn, up from €762m a year earlier, which IAG said showed "significant progress towards its long-term targets".

Vueling reported a slight rise in annual operating profits to €141m. It increased capacity by 24% and added new bases in Brussels and Rome.

Last month, IAG launched a €1.36bn takeover bid for Irish airline Aer Lingus, but it gave no further details on the progress of the takeover in its results statement.

The Irish government, which holds a 25% stake in Aer Lingus, is believed to have concerns over the deal and trades unions have warned over jobs cuts.

IAG chief executive Willie Walsh, told the ´óÏó´«Ã½: "We'll have discussions in due course with the Irish government.

"I'm very much focused on the fantastic results that we've announced today and looking forward to developing IAG with the existing airlines and with opportunities to expand with other airlines."