British Airways faces a crunch meeting with pilots' union Balpa on Monday to address their concerns over the launch of a new subsidiary airline flying direct from European cities to America.

Come fly with me: Dale Moss, BA's former director of worldwide sales, will head the new carrier In a landmark move, BA yesterday unveiled a new company, aptly called OpenSkies, to capitalise on last March's ground-breaking deal between the EU and the US that liberalises flights between the two trading blocs.

From April, BA will be allowed to take on the likes of Air France and Lufthansa in their own backyards by flying direct from European airports to US destinations, just as its rivals can start transatlantic operations from the UK flag-carrier's Heathrow base.

The new airline will launch in June with one Boeing 757 aircraft operating daily from New York to either Brussels or Paris Charles de Gaulle airports. A second aircraft will be added later this year to fly to the other EU destination.

Dale Moss, BA's former director of worldwide sales, will head the new carrier.

BA said it planned to operate six 757s by the end of 2009. Other EU destinations under consideration include Frankfurt, Amsterdam, Milan and Madrid. BA is also considering flights to Boston and Washington.

BA's 3,000 existing pilots are concerned, however, that the new venture - set up as a separate subsidiary with its own air operator certificate - will employ flight crew on different terms and conditions, potentially undermining their current agreements.

Jim McAuslan, Balpa general secretary, broadly welcomed OpenSkies' launch, but added: "We have issues with BA on how the new service should be structured. Having worked so hard to secure success for BA, its pilots do not want to see its brand or safety record put at risk. The new subsidiary can only fly successfully with the support of BA's pilot force."

Balpa declined to say whether these issues could trigger a wider strike ballot.

To ensure OpenSkies has a lower cost base than BA, new pilots and cabin crew are being recruited on more flexible terms than current BA staff and Balpa is concerned this will prevent pilots transferring between the two operations.

Willie Walsh, BA chief executive, said there was no altercation brewing with pilots. "We have no dispute. We are in discussions," he said. "It's about terms and conditions."

He added that the new carrier was "no different from our other subsidiary, BA CityFlyer Express".

Chris Avery, an analyst at JP Morgan, said: "I don't think this carrier is big enough to cause a major showdown. I'm more interested in the competitive response this sparks - what Air France and US carriers do in return."

He noted that American Airlines was a partner of BA in the Oneworld airline alliance, adding: "I wonder what American thinks of its European routes being trampled over by its partner."

BA said the 757s will carry up to 82 passengers in three classes: business, premium economy and economy. Initial plans to launch a business-only venture were canned due to lack of demand.

Mr Walsh said BA would continue to lobby for the second phase of open skies, which compels the US to open up its domestic market and relax foreign ownership rules by 2010 or risk EU countries tearing up the current deal.

BA also announced a five-weekly service to its sixth Indian destination, Hyderabad, consolidating India's position as the carrier's second most important market after America. Flights begin on October 27.

BA shares slipped 9.5 to 273.25.