Speaking at a news conference in Vienna to launch Level, IAG chief executive Willie Walsh said the new carrier would initially fly short-haul routes from Vienna before going further afield.
“One of the reasons we chose the Level brand to operate from Vienna (is) that we are looking for opportunities to further expand long-haul flights,” he said.
IAG, which also owns Iberia, Vueling and Aer Lingus, joins a handful of other airlines that are offering budget long-haul flights, including Norwegian Air.
The company bought a 4.6% stake in Norwegian in April and has made two offers for the airline, both of which were rejected.
Level will begin flights from Vienna with four leased Airbus A321, which were part of collapsed Air Berlin’s estate. Walsh said the plan is to increase the fleet to 30 within the next five years.
Since the demise of Air Berlin, Vienna Airport has been trying to entice budget carriers with an incentive scheme, which has seen the likes of easyJet (LON:EZY) Lufthansa’s Eurowings, Budapest-headquartered Wizz Air (LON:WIZZ), and IAG’s own short-haul low-cost carrier Vueling increase services from the airport in the past few months.
Aviation experts have raised concerns that too many short-haul budget airlines in the market could result in further casualties after the collapse of Air Berlin and Monarch.
“We would not do this if we weren’t convinced this is for the long term,” Walsh said, adding that the Austrian market was still under-represented and under-served.
In mid-afternoon trading, IAG shares were up 0.7% to 679p.