BA’s merger with Spanish airline Iberia has contributed to the loss of all profits for the UK airline as the Spanish economy falls at a faster than expected rate.

BA has announced a pre-tax annual loss of €1 billion after the merger with Iberia. Spain has seen its economy continue to falter within the eurozone, with a further contraction of 0.8 percent in Q4 2012.

BA made a profit of €347 million in 2012 after losses made by bmi, however the merger with Iberia saw a loss of €351 million, with the faltering Spanish economy wiping out all loses for BA.

Willie Walsh, the chief executive of International Airlines Group (IAG) , the multinational airline holding company that counts Iberia and BA as its subsidiaries, said: “We didn't expect the uncertainty around the eurozone to be as bad as this", he added that, “we're in it for the long term. I don't regret the merger."

IAG has also suffered from increasing fuel costs with price rises of 20 percent alongside costs relating to the restructuring of Iberia.

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