Thomas Cook will set up a new airline based in Palma de Majorca, Spain.
The tour operator hopes the move will lower costs at a time of tough conditions in the European short-haul market.
Flights are due to launch in early 2018 with at least three Airbus A320s, which were previously flying for the group’s Belgian airline.
The Majorca aircraft, which fly under a Spanish operating licence, will also be used for Thomas Cook’s other airlines, according to seasonal demand.
Some staff will be on seasonal contracts.
“The new airline and base will provide us with the right platform to better manage the seasonal demand in our business, giving us more control at lower cost as we continue to expand the choice of destinations we offer our customers,” Christoph Debus, chief airline officer at Thomas Cook, said.
Thomas Cook announced earlier this month it would exchange several aircraft with Canada’s Transat.
Under the deal, Thomas Cook will provide planes that fly short-haul routes in the summer to the Canadian company during the winter, while it will receive a long-haul plane to take Europeans seeking winter sun to further flung destinations.