The owner of British Airways is launching a new long-haul budget airline based in Barcelona.
IAG said the new airline, Level, would initially fly to Los Angeles, Oakland, Buenos Aires and Punta Cana in the Dominican Republic from June.
The airline will use Iberia crew and two new Airbus A330 planes.
Willie Walsh, IAG chief executive, said Level would become its fifth airline brand alongside Aer Lingus, BA, Iberia and Vueling.
"Barcelona is Vueling's home base and this will allow customers to connect from Vueling's extensive European network onto Level's long-haul flights," he said.
The company will look to offer Level flights from other European cities. "We're really excited about the opportunities for expansion," Mr Walsh added.
Fares start from 99 euros/$149 each way.
Travel writer and broadcaster Simon Calder said the new airline was good news for travellers as more competition would put pressure on fares.
He said IAG's move echoed Lufthansa's decision to offer flights to destinations in the Caribbean and Asia on Eurowings, its low-cost offshoot.
It was also an attempt to counter the challenge posed by low-cost newcomers such as Norwegian Airlines.
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