BRITISH Airways and merger partner Iberia posted smaller losses in the pair’s first set of results since joining forces in January.

International Airlines Group said it benefited from improved passenger volumes, including from premium seats, as revenues for the three months to March 31 rose by 15% to 3.6bn (£3.2bn).

While fuel costs jumped by 31% to 1.1bn (£985m) in the period, pre-tax losses narrowed sharply to 47m (£42.1m), from 273m for the equivalent three months a year earlier.

Former BA boss Willie Walsh, who is now chief executive of the combined group, said the integration of the business remained on track.

BA and Spain’s Iberia have retained their brands in the merger, which is expected to save 400m (£358.3m) a year by its fifth year. It is now the third largest scheduled airline group in Europe and the sixth largest in the world, based on revenues. The pair fly to more than 200 destinations on more than 400 aircraft and, last year, carried 55 million passengers.

IAG plans to expand aggressively and has reportedly drawn up a list of 12 other airlines it will consider buying.

Mr Walsh said costs excluding fuel were down 5.2% in the quarter after supplier and employee overheads both fell by 4.7% in the period.

He added: “The continued focus on cost control has been achieved, while we have seen some measured increases in capacity.

“We have been able to increase capacity without additional aircraft and employees, highlighting the good work that has been done in previous years.”

IAG’s shares opened more than 3% higher after yesterday’s first-quarter update.