IAG, Europe's second-biggest airline group by value behind Lufthansa, said operating profit in the three months to the end of September fell to €363 million (£311 million) from last year's third-quarter profit of €528 million.

by a quarter to €1.39 billion in the period and weak demand at Spain's Iberia offset strong trade at British Airways.

"Rising fuel costs are the biggest challenge to the industry in the short-term along with potentially weaker demand in 2012," said Walsh.

The company had been expected to report a third-quarter operating profit of €350 million, according to the consensus analyst forecast supplied by IAG.