UPDATE 3-British Airways owner says pilot strikes to hit profit

* BA strikes seen wiping 137 mln euros off earnings

* Low-cost Vueling, Level bookings weaker

* IAG will seek abandoned Thomas Cook slots - CEO
(Updates with CEO comments, details, background)

By Laurence Frost and Tanishaa Nadkar

Sept 26 (Reuters) - British Airways parent IAG on
Thursday warned of a fall in annual profits citing a pilots
strike and weaker performance by budget carriers Vueling and
Level, hitting shares in Europe's third largest airlines group.

Recurring operating profit will fall 215 million euros
($235 million) to 3.27 billion this year, IAG said in a
statement, after strikes at British Airways grounded thousands
of flights earlier this month.

A Sept. 9-10 strikes dealt a heavy blow to British Airways,
still reeling from a third major computer failure in two years,
which disrupted operations in August.

Pilot unions called off a second strike this week but said
that industrial action may resume unless progress is made on a
pay dispute.

"Any further industrial action will additionally impact
IAG's full-year 2019 operating profit," the group cautioned.

Shares in the owner of Iberia, Aer Lingus and Vueling were
down 3.6% at 462.8 pence as of 1024 GMT.

The setbacks at IAG add to strains across the industry -
including weakening demand, higher fuel costs and low-cost
competition - factors that contributed to travel group Thomas
Cook's collapse and pose a threat to second-tier airlines.

Further bankruptcies among competitors will help to support
IAG's growth next year, group Chief Executive Willie Walsh told
analysts.

"A number of weaker airlines are either disappearing or
significantly reducing their capacity," he said, predicting a
"slightly softer" environment in 2020.

IAG now expects passenger unit revenue to be slightly lower
before currency effects, with full-year capacity growing by
about 4%, less than the 5% previously planned.

The group nevertheless aims to expand into the gap left by
Thomas Cook at London's Gatwick airport by acquiring take-off
and landing slots sold off under bankruptcy or reallocated by
aviation authorities, Walsh said.

"We clearly see Gatwick as an opportunity for us for growth
purposes," he said.

The BA strikes accounted for 133 million euros of the
earnings hit, IAG said, with a further 33 million stemming from
industrial action by Heathrow airport staff and 45 million from
weaker bookings at Vueling and Level.

Vueling, which competes against European budget carriers
easyJet and Ryanair, has seen a "very noticeable
change in booking patterns", with passenger numbers and yield
down for October-November, Walsh said.

Level, launched two years ago as a low-cost long-haul
carrier, has suffered along with other airlines with exposure to
crisis-hit Argentina.

British Airways, whose offer of a 11.5% pay rise over three
years has been rejected by pilots, has yet to resume talks with
their unions, IAG said.

($1 = 0.9147 euros)
(Reporting by Laurence Frost in Paris; Tanishaa Nadkar,
Shashwat Awasthi and Aakash Jagadeesh Babu in Bengaluru; Editing
by Jane Merriman and Jason Neely)