Air Nostrum and CityJet have signed an agreement to come together under a new holding company.
The deal, which the pair claim would see the creation of the largest pan-European regional airline group, is subject regulatory approvals.
Valencia-based Air Nostrum, which employs 1,450 people, is the regional operator for Iberia under a longstanding franchise agreement.
It is also provides wet lease services for customers across Europe, including Lufthansa, SAS, Binter or Croatian Airlines.
Dublin-based CityJet employs 1,250 people across nine European countries and operates a network of services under wet lease contracts with Air France, Brussels Airlines and SAS with a fleet of over 40 aircraft.
Carlos Bertomeu, president of Air Nostrum, said: "Europe is experiencing substantial expansion of wet lease contracts as established airlines pursue a strategy of outsourcing their regional flying programmes.
"By CityJet and Air Nostrum finding a formula for combining their respective resources in terms of aircraft, crew and support services, this will undoubtedly result in a far more comprehensive and cost effective option for leading airlines in Europe to outsource their regional networks with confidence in the strength of this proposed new entity as an ideal partner for such activity."
CityJet CEO Pat Byrne added: "There are so many things we have in common with Air Nostrum, especially the fact that we both operate large fleets of Bombardier CRJ 900 and CRJ 1000 aircraft which we believe is a robust and economic platform and ideal for wet lease contracts.
"Our combined fleets would represent a total fleet strength close to 100 aircraft. By coming together, we believe we will be in a position to respond to the specific needs of customer airlines through our flexibility in the provision of safe, dependable and quality assured operations."
The consolidated annual gross revenue of Air Nostrum and CityJet would be around €700 million.
