Walsh will be succeeded by Luis Gallego, chief executive of Iberia, which is also part of IAG. "Willie has led the merger and successful integration of British Airways and Iberia to form IAG," said IAG chairman Antonio Vazquez.
"Under Willie’s leadership, IAG has become one of the leading global airline groups. [He] has been the main driver of this unique idea that is IAG. I hugely admire his commitment, strong leadership and clear vision, always ready to take on whatever challenges lay ahead of him.
"I am deeply respectful of what he has achieved as chief executive of this group, of his sense of fairness, transparency and capacity to integrate people regardless of nationalities or backgrounds.
Vazquez added it was testament to the "strong management team" Walsh had built that IAG would be able to promote a successor, Gallego, from within.
"Luis started his career in the airline industry in 1997 with Air Nostrum and, since 2014, he has been chief executive of Iberia where he has led a profound transformation of this airline.
"The board is confident Luis is the right person to lead IAG in the next stage of its development and we look forward to working closely with Luis in his new role."
Walsh said it had been a privilege to have played a major role in the formation and development of IAG. "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 chief executive of IAG."
Gallego, whose successor at Iberia IAG said would be announced in due course, added: "It has been a great pleasure to work with Willie over the last seven years. 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."
Walsh will stand down from the role and the IAG board on 26 March before retiring on 30 June.
