By Yadarisa Shabong and Joanna Plucinska

Feb 28 (Reuters) - British Airways owner IAG

reported a 27% jump in annual operating profit on Friday,

beating market expectations as it curbed costs and growth in its

lucrative transatlantic routes took off.

European airlines overall have struggled in the past year

with spiralling costs and delivery delays.

IAG, which also owns Spanish airlines Iberia and Vueling,

said however it was confident about delivering margins and

returns as demand for travel remained strong.

The group plans a 1-billion-euro ($1 billion) share buyback,

it said as it posted adjusted operating profit of 4.44 billion

euros, above analysts' expectations from a company-compiled poll

for 4.08 billion euros.

"These results highlight the... effectiveness of our

strategy, underpinned by the successful execution of our

transformation programme across the group," CEO Luis Gallego

said in a statement.

In stark contrast to other European airline stocks, its

shares have soared in the past year as the group benefited from

limited delivery delays, strong demand and resilience on its

core transatlantic routes.

Lufthansa is more exposed to the tougher Asian

market than IAG, where Chinese carriers are able to fly in

Russian airspace, making their flights shorter and cheaper.

At Air France, the Paris Olympics caused international

tourists to avoid the city and residents in France to postpone

their holidays.

Lufthansa and Air France-KLM report their

full-year results on Thursday.

UNCERTAINTY ON DELIVERIES

IAG pointed to possible plane delivery delays this year from

Airbus and Boeing ( BA ), adding that it was looking to

put in an order for another round of widebody planes in the

future.

"We need to adjust our capacity because of the situation,"

Gallego said on a media call, adding that the group expected 26

aircraft deliveries in 2025.

But supply constraints ultimately could benefit airline

results, analysts have said, and could help IAG further bolster

its exceptionally strong position compared to its competitors.

"While airlines individually wish they had new, modern

aircraft with more capacity and higher fuel efficiency,

collectively this should keep the industry supply-constrained,

yields supported and earnings high," Bernstein analyst Alex

Irving said in a note.

($1 = 0.9628 euros)