I know it is a very different ball game but look at LH and LX, from start to finish the LX in air offering is streets ahead of LH, similarly on the ground too except in F.

As I understand it the aim with IB is to have a distinct product offering tailored to the target audience (Southern Europe, Spanish Caribbean and South America) whilst also catering to those connecting from BA. This would be the strategy even without the losses at IB because it allows IAG to serve a completely different market demographic in a different way. Some of the target audience would also be repelled by the BA brand.