BRUSSELS, March 20 (Reuters) - Airline executives called

for further industry consolidation on Wednesday as the EU weighs

a deal between Germany's Lufthansa and Italy's ITA

Airways and hits pause on a separate transaction between IAG

and Air Europa.

Europe's airline industry has been gradually consolidating

for the last 20 years but remains fragmented, with small

national carriers struggling to compete with bigger rivals,

often needing expensive government bailouts.

The European Commission should "get on with it and approve

these mergers because, ultimately, it is the way forward in

Europe," Ryanair CEO Michael O'Leary said at an industry

event in Brussels.

He added there was a need to "tidy up" small-scale,

struggling carriers in Europe, pointing to Portugal's TAP as

requiring an "unsustainable" amount of taxpayer support to

survive during the pandemic.

Others highlighted that smaller airlines have a much greater

chance of success as part of larger groups, such as Air

France-KLM, IAG and Lufthansa.

"If we don't allow consolidation in Europe, we will destroy

airlines in Europe," IAG CEO Luis Gallego told the conference.

The European Commission declined to comment.

LUFTHANSA NEXT STEPS

The European Commission is due to say this week how it views

Lufthansa's bid to acquire a 41% stake in state-owned ITA for

325 million euros ($352 million) while offering up a statement

of objections to the deal.

EU antitrust regulators opened an investigation into the

potential deal in January, with warnings it could reduce

competition in flights to and from Italy. Potential remedies

could include opening up slots, traffic rights and planes to

allow a rival to operate on some routes.

Lufthansa CEO Carsten Spohr said he wanted to close the deal

"as soon as possible", and was optimistic ahead of the expected

EU statement of objections, with rivals such as easyJet

and Ryanair vying to take over slots that could be given up in

Italy as part of the deal.

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