A new force in European leisure aviation is set to be created through a combination of German’s Tuifly and parts of loss-making Air Berlin.

Air Berlin part-owner Etihad Aviation Group and Tui today confirmed they are in discussions to create a European leisure airline group.

This will focus on point-to-point flying to connect key tourist markets.

The plan involves contributing the tourist-based operations of the Air Berlin group and Tuifly.

This will include aircraft currently operated by Tuifly for Air Berlin under a wet-lease agreement being moved into a new airline group established by Tui AG and Etihad Aviation Group.

The new airline group would serve a network of destinations from Germany, Austria and Switzerland.

The leisure airline group will be supported by the expertise of Etihad Airways owner Etihad Aviation Group and utilise Tui’s distribution capacity.

Tui AG, Etihad Aviation Group and Air Berlin intend to finalise an in-principle agreement in due course, a statement said.

“Any agreement entered into will be subject to all necessary corporate and regulatory approvals.”

The move comes days after Air Berlin announced a massive cost-cutting shake-up including the loss of up to 1,200 jobs and the redeployment of excess aircraft.