British Airways is to launch a subsidiary airline which will offer luxury-seat flights directly from continental Europe to America - taking on rivals such as German flagship carrier Lufthansa.

The new business - called OpenSkies - will start in June with one Boeing 757 aircraft that will operate from New York to either Brussels or Paris Charles de Gaulle airports.

A second 757 will be added to the fleet later this year and will fly from whichever of the two European airports that is not involved in the June launch. BA plans to have six 757s in operation by the end of 2009. Instead of the usual 180-seat configuration, the 757s on OpenSkies will accommodate just 82 passengers in three classes - business, premium economy and economy.

Business class will consist of 24 seats that can convert into six ft-long flat beds. There will be 28 premium economy seats with a 52in seat pitch and 30 economy seats.

The launch of the new venture has been made possible by the "open skies" EU-US deal which comes into effect in April.

Until now, BA has only been allowed to fly to the US directly from the UK. The open skies arrangement will enable European carriers to operate aircraft from anywhere in the EU to America. The open skies deal will also end the arrangement which has seen only four airlines - BA, Virgin Atlantic, American Airlines and United Airways - allowed to fly to the US from Heathrow Airport.

However, EU carriers believe that America has got the better side of the deal, as US airlines can fly anywhere within the EU but EU carriers will not, to start with, have the same freedom in America.

BA chief executive Willie Walsh said: "This is an exciting new venture for us and we're confident that it will be a great success as we build on the strength of British Airways' brand in the US and Europe.

"By naming the airline OpenSkies, we're celebrating the first major step in 60 years towards a liberalised US/EU aviation market which means we can fly between any US and EU destination. "It also signals our determination to lobby for further liberalisation in this market when talks between the EU and US take place later this year."

The 757s will have winglets retro-fitted on the aircraft. These will improve fuel efficiency, reduce the aircraft's CO2 emissions and increase the aircraft's operating range.

OpenSkies' managing director will be Dale Moss, BA's former director of worldwide sales, and the airline is registered in the UK.

It will shortly file an application for the necessary regulatory approval in the US and UK.

Jim McAuslan, general secretary of the British Airline Pilots' Association, said: "We welcome BA's decision to establish a wholly-owned subsidiary company to take advantage of the new open skies agreement between the US and EU but we have issues with BA on how the new service should be structured."

Mr Walsh said that among the cities from which BA hoped to operate the new business were Amsterdam, Frankfurt and Milan. BA does not yet know whether it will be allowed into New York's Kennedy Airport.

Mr Walsh was confident any difficulties with Balpa could be sorted out, but stressed the terms and conditions for the new venture would be different from those for BA staff in the carrier's main operation.