Named LEVEL, the carrier will operate from June and go from Barcelona to Los Angeles, San Francisco (Oakland), Buenos Aires and Punta Cana.
LEVEL will fly two new Airbus A330 aircraft branded with its own livery and fitted with 293 economy and 21 premium economy seats.
Initially it will be run by IAG airline Iberia’s flight and cabin crew and will create up to 250 jobs based in Barcelona.
Barcelona has been chosen as the first European city for the launch of the new carrier but LEVEL will look to expand its flights from other European cities, an IAG statement said.
Fares go on sales from today and lead in from €99/US$149 one way.
Willie Walsh, IAG chief executive, said: “LEVEL is an exciting new IAG airline brand which will bring a stylish and modern approach to flying at prices that are even more affordable. It will benefit from having the strength of one of the world’s largest airline groups behind it.
“LEVEL will become IAG’s fifth main airline brand alongside Aer Lingus, British Airways, Iberia and Vueling. It will complement our existing airline portfolio and further diversify our current customer base.
“Barcelona is Vueling’s home base and this will allow customers to connect from Vueling’s extensive European network onto LEVEL’s longhaul flights.
“This is just the start. We’re really excited about the opportunities for expansion and we plan to bring LEVEL to other European destinations”.