Mediaboss Marketing

(03-23) 08:52 PDT MADRID, Spain (AP) --

Spanish carrier Iberia on Friday unveiled a new low-cost airline, Iberia Express, which aims to claim a stake in the highly competitive no-frills sector of the European market.

The new airline is part of a plan by parent company International Consolidated Airlines Group to increase profitability after the merger of its component parts, British Airways and Iberia.

Iberia Express will initially cover Vigo, Santiago and Granada on Spain's mainland and its island destinations of Menorca, Ibiza, Fuerteventura, Lanzarote and La Palma. It will expand internationally to Ireland, Italy, Greece, Latvia and Netherlands, chief executive Luis Gallego said at a press conference.

Inaugural flights will take off Sunday, although the company's website was not up and running Friday afternoon. Prices begin at (EURO)25 ($33) one-way with a surcharge for checking in luggage and booking seats in advance.

The new company employs 500 staff and has a fleet of four Airbus 320 planes, although there are plans to increase this to 14 aircraft by the end of the year.

The airline is the subject of a protracted labor dispute between Iberia and Spain's main pilots' union, Sepla which held 12 days of stoppages in Dec. and Jan.

Sepla pilots argue Iberia Express would mean job losses among the 1,600 pilots who work for the main airline a claim disputed by Iberia.

Sepla had announced nine days of strikes in April and May but called them off following government mediation and has agreed to negotiate further with Iberia.

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Spain's Iberia unveils low cost Iberia Express