Abu Dhabi’s Etihad Aviation Group and German travel company TUI have entered talks to create a new European leisure airline group through the combination of Air Berlin’s “touristic” operations and TUIfly, the prospective partners announced Wednesday. The new airline would concentrate on point-to-point flying between “key” European tourist markets. Etihad owns a 29.21 percent stake in Air Berlin, now the second largest airline in Germany.

The proposal involves the use of aircraft currently operated by TUIfly for Air Berlin under a wet-lease agreement and the establishment of a broad network of destinations from Germany, Austria and Switzerland.

TUI, Etihad and Air Berlin plan to complete an agreement in “due course,” according to a statement issued by the companies.  

The partnership would mark another move by Air Berlin to consolidate its operations in an effort to stem growing losses it attributes largely to industrywide overcapacity and jitters over terrorism threats. The talks follow last month’s agreement by Air Berlin to wet lease 40 Airbus A320-family narrowbodies to the Lufthansa Group for its Eurowings and Austrian Airlines units.

TUIfly operates as part of TUI Group, which has built a portfolio of more than 300 hotels, 14 cruiseliners and six European airlines operating some 140 aircraft and a wide-reaching distribution network, covering more than 1,800 travel agencies and online portals.