Traffic, measured in revenue passenger kilometres, rose by 8.9 percent versus June 2011, while passenger load factor - a measure of how well it fills its planes - was up 1.2 percentage point at 76.1 percent, it said on Wednesday.

IAG (ICAG.L) said its first and business-class travel - the most profitable part of its passenger business - rose 5.3 percent, while non-premium traffic was up 9.6 percent.

British Airways' June traffic was up 11.3 percent compared to a 3.2 percent rise at Iberia.

However, the company said it expects to see some "near-term softness" in premium traffic due to the London Olympic Games.

IAG has seen worsening economic conditions in Spain hit its performance in recent months, undermining strength in long-haul travel out of London.

The group recently said its commercial performance at its Madrid hub has deteriorated further due to the ongoing effects of challenging macroeconomic conditions in Spain and across the wider euro zone, as well as the after-effects of prolonged industrial action.

Earlier this month easyJet (EZJ.L) said it planned to cut flights to and from Madrid by 20 percent after ceasing to base aircraft and employees there, and would now review options for its eight aircraft and 310 crew members in the capital.

Shares in IAG, which have risen 12 percent in the last month, were up 1 percent at 160.75 pence by 1532 GMT, valuing the group at around 2.9 billion pounds. (Reporting by Rhys Jones; editing by Sarah Young)

• A Permanent Economic Emergency