IAG lifts bid for Vueling by a third

Vueling, the Barcelona-headquartered budget airline that IAG wants to take full control of, saw shares surge in Madrid on Wednesday after the British Airways and Iberia owner raised its bid for the firm.

The news came just hours after IAG announced the resignation of Iberia's Chief Executive Officer Rafael Snchez-Lozano.

Shares in IBEX-listed Vueling were up 8.84% at €9.23 before the close (following an earlier suspension) after IAG upped its original €7.0-a-share bid to €9.25 a share, an increase of 32%. IAG already has a 45.85% stake in Vueling.

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The new proposal, which has extended the offer acceptance period, values the whole of Vueling at €277m.

Vueling is thought to be key to IAG's restructuring plans in Spain as struggles with its loss-making Iberia unit pressured to group to a €23m loss in 2012.