Global airline titan IAG on Thursday said its chief executive Willie Walsh had quit, after a long stint that saw him oversee the group's creation and rapid expansion, and would be replaced by Luis Gallego, head of Spanish division Iberia.

Walsh stands down on March 26 ahead of retirement, the owner of British Airways said in a statement.

The announcement brings down the curtain on Walsh's 15-year career with BA and IAG. Starting as BA chief executive, he went on to oversee the 2011 merger of British Airways and Iberia.

IAG has since expanded to include Aer Lingus, Level and Vueling.

The Irishman also spearheaded a cost-cutting drive to compete with budget airlines, despite criticism from some quarters that this cheapened the brand of BA -- which once called itself the world's favourite airline.

Walsh, 58, was originally a pilot at Ireland's Aer Lingus but rose to become chief executive, before taking up the same role at BA in 2005.

"Willie has led the merger and successful integration of British Airways and Iberia," IAG chairman Antonio Vazquez said in Thursday's statement.

"Under Willie's leadership IAG has become one of the leading global airline groups."

But British Airways suffered major disruption in September when for the first time in its 100-year history pilots employed by the airline went on strike in a long-running pay dispute.

Willie Walsh helped build the International Airlines Group (IAG) with the 2011 merger of British Airways and Iberia
Willie Walsh helped build the International Airlines Group (IAG) with the 2011 merger of British Airways and Iberia AFP / Daniel LEAL-OLIVAS

"It has been a privilege to have been instrumental in the creation and development of IAG," Walsh said in the statement.

"I have had the pleasure of working with many exceptional people over the past 15 years at British Airways and at IAG.

"Luis has been a core member of the team and has shown true leadership over the years and I have no doubt he will be a great CEO of IAG," Walsh added.

In London midday trading, IAG shares gained 1.0 percent to 624.8 pence on London's benchmark FTSE 100 index, which was up half a percentage point overall.

"Willie Walsh leaving BA has been very well telegraphed so the modest rise in IAG shares probably better reflects the overall market mood," said London Capital Group analyst Jasper Lawler.

"Iberia has been very much an equal partner in the group with BA in recent years so it makes sense that the Iberia chief Luis Gallego takes the reins."

Lawler added that Walsh had navigated other "difficult times, including fuel prices spikes and cut-throat competition from budget airlines".

Iberia has yet to announce Gallego's replacement.

"It is a huge honour to lead this great company. It is an exciting time at IAG and I am confident that we can build on the strong foundations created by Willie," Gallego said.

As Iberia chief since 2013, Gallego managed to return the airline to profitability after years of losses. He began his professional career in the Spanish Air Force before joining the commercial sector.

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