Abu Dhabi’s Etihad Airways took the second crucial step in a week towards salvaging its investment in German airline Air Berlin when it announced talks with Tui Group about jointly establishing a new European airline focused on tourism. Disclosure of the talks on Wednesday comes seven days after lossmaking Air Berlin revealed it was slashing capacity by leasing 40 of its passenger jets to Lufthansa, its larger rival, for use in European short-haul operations. The new airline being discussed by Etihad and Tui would use 35 Air Berlin jets that the airline said last week it was putting into a separate “touristic” — or charter — business. Air Berlin said then that it would “evaluate strategic options” for the charter operations. Etihad agreed to become Air Berlin’s largest shareholder in 2011 by taking a 29.2% stake, and has provided a series of cash injections that have kept the German airline going through significant financial problems. Air Berlin has been struggling to develop a viable business model and recorded a net loss of E271m for the first half of this year. Meanwhile, Germany’s Tui group, which owns tour operators as well as airlines and hotels, said last year it was rationalising its multiple carrier brands. Etihad and Tui said in a joint statement on Wednesday that they were in talks to create a “strong European leisure airline group, focused on … flying to connect key tourist markets”. The companies said they were proposing for the new airline to absorb the charter operations of Air Berlin and TUIfly, Tui’s low-cost airline. The new airline would be jointly owned by Etihad and Tui and would serve a “broad range of destinations” from Germany, Austria and Switzerland, but no details on a timetable for a deal or its financial structure were provided.<br/>