IAG airline's Walsh hands control to Gallego with crisis in mid-air

* Insider Luis Gallego to take over as IAG CEO on Tuesday

* IAG planning 2.75 bln euro rights issue

* Shareholders to vote on Walsh's 883,000 pound bonus

By Paul Sandle

LONDON, Sept 8 (Reuters) - Willie Walsh will pass the
controls of IAG to Luis Gallego at the British Airways and
Iberia owner's annual meeting on Tuesday, where shareholders
will be asked to stump up billions of euros to help it through
the coronavirus crisis.

Former pilot Walsh delayed his departure from International
Consolidated Airlines Group, which he created by
dragging BA and Iberia into the modern age of budget flying,
taking a tough line on unions and cutting costs.

Walsh, who has been CEO of BA since 2005 and of IAG since it
was created in 2011, faces one last test as Institutional
Shareholder Services have called to reject his farewell 883,000
pound ($1.16 million), although the vote on the airline group's
remuneration report is non-binding.

Meanwhile Gallego, a Spanish insider who turned around
Iberia, will have to cut costs, while managing damaged relations
with unions and politicians and stepping up the group's battle
with Ryanair and easyJet.

IAG's position is expecting to be strengthened by raising
2.75 billion euros ($3.25 billion) from shareholders in a rights
issue which is backed by its biggest shareholder Qatar.

"Major shareholders are satisfied that IAG's equity raise
will be enough to weather the crisis… or at least that's their
hope," one banking source told Reuters.

At BA, where 12,000 jobs are set to go and new terms have
been set for long-serving staff, unions have vowed to fight and
the British government said the plan was a "breach of faith"
after it accessed state funds to pay wages during the crisis.

Gallego will also have to restore services, the airline was
only flying 20% of its pre-COVID 19 schedule last month, and
stem a cash outflow of 20 million pounds a day.
($1 = 0.8467 euros)
($1 = 0.7590 pounds)
(Reporting by Paul Sandle and Sarah Young;
Editing by Alexander Smith)