IAG's CEO Walsh says Aer Lingus might not survive on its own

* IAG boss says will not drag out bid for Aer Lingus (Other OTC: AELGF - news)

* Some job losses inevitable, but will add more long term

* Warns that Aer Lingus on its own would be "challenging" (Adds second radio interview, parliamentary hearing)

By Padraic Halpin and Conor Humphries

DUBLIN, Feb 12 (Reuters) - The chief executive of British Airways owner IAG told Irish politicians on Thursday that Aer Lingus would struggle to survive if they do not back its bid for the former flag carrier.

Dubliner Walsh, who began his career as an Aer Lingus pilot and was the airline's chief executive before he moved to British Airways 10 years ago, was back this week campaigning to win over sceptical MPs to IAG's 1.36 billion-euro offer, which already has the qualified backing of Aer Lingus's board.

The board's recommendation is subject to the Irish state agreeing to sell its 25 percent holding and, with tough elections just a year away, resistance has been building among government MPs whom Walsh faced at a parliamentary hearing on Thursday, telling them his intentions were "completely positive".

"I spent 25 years working there, I love the company but I have been very clear for a long time, Aer Lingus has a tough job ahead of them trying to survive - survive, never mind grow - in an industry that is becoming more consolidated," Walsh told the Newstalk radio station ahead of the committee hearing.

"To truly exploit the opportunity that exists, it needs to be part of a bigger group."

In one of three newspaper interviews published earlier on Thursday, Walsh said he was "nowhere near" walking away from its bid. Speaking to another radio station, he said he believed the Irish government is still open to the deal despite the pressure.

While he faced concern rather than hostility from the 26-member committee, Aer Lingus's main trade union said little had changed.

"I'm still of the view that IAG will always look after IAG first, not Ireland (Other OTC: IRLD - news) ," said the IMPACT union's national secretary, Matt Staunton.

Aer Lingus's shares, which have been trading 13 percent below the IAG offer price of 2.55 euros on worries over the political opposition, were 2.2 percent higher at 2.23 by 1545 GMT on Thursday.

In a bid to soothe concerns, IAG said last week that it will maintain for at least five years key landing and take-off rights for its Irish routes at London Heathrow, Europe's biggest hub airport. Many MPs asked Walsh to stretch that to 10 or 15 years and expressed concerns over jobs.

Walsh, speaking publicly on the bid for the first time, said there would inevitably be some job losses in administrative roles but that IAG's plans to expand Aer Lingus's fleet would add jobs for pilots, cabin crew and engineers.

The five-year Heathrow guarantee was final, Walsh said, telling MPs he never improves his first offer, only reduces it. IAG would be crazy to try and change the current successful set-up though, he added.

However, he also said IAG was not prepared to give those commitments in the absence of it acquiring full ownership of Aer Lingus. Asked if it could seek to buy the remainder of the airline if the government rejects the offer, Walsh said: "We'll wait and see." (Editing by Vincent Baby and Greg Mahlich)