(Adds comment by Lufthansa CEO)

By Joanna Plucinska and Julia Payne

BRUSSELS, March 20 (Reuters) - More consolidation of Europe's airlines is necessary to keep the industry competitive, the CEOs of British Airways owner IAG and Ryanair said on Wednesday, as the EU weighs a new deal between Germany's Lufthansa and Italian rival ITA Airways.

"If we don't allow consolidation in Europe, we will destroy airlines in Europe," IAG CEO Luis Gallego told an aviation conference.

Ryanair CEO Michael O'Leary said on the same panel that consolidation "does need to be encouraged".

"(Portugal's) TAP has only survived through COVID because the taxpayer," he said. "Aer Lingus was acquired by IAG... those airlines have been much the better and have a more secure future as part of bigger airlines."

The European Commission is due to say this week how it views Lufthansa's bid to acquire a 41% minority stake in state-owned ITA for 325 million euros ($352.30 million).

Lufthansa's CEO said he wanted to close the deal "as soon as possible", and was optimistic ahead of the expected EU statement of objections.

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.

($1 = 0.9225 euros) (Reporting by Julia Payne and Joanna Plucinska; Editing by Louise Heavens and Jan Harvey)