Lufthansa is in advanced talks with Turkish Airlines about setting up a joint long-haul low-cost subsidiary.
The German airline will decide later this year whether to go it alone or to cooperate with Turkish Airlines on certain long-haul routes, with the joint venture likely to start from November 2015.
The low-cost subsidiary will include the Wings name as part of its identity, fitting in with Lufthansa partner carriers Germanwings and Eurowings.
Lufthansa chief executive Carsten Spohr, who took over in May, is behind the move.
He told Bloomberg News that a subsidiary had to be created in order to compete against the Middle East and Asian carriers.
He said: "In the dynamic and highly price-sensitive market segments, our current platforms only enable us to exploit the growth potential to a limited extent, in view of their sometimes over-rigid cost structure. That's why we are now seeking to tap new growth areas."
Spohr added: "In an initial phase, the new intercontinental platform is expected to operate with a fleet that will gradually be built up to seven Boeing 767 or Airbus A330 aircraft, with operations likely to commence in winter 2015."
It is thought that these aircraft will be fitted with an upgrade option, probably a premium economy cabin.
Lufthansa is also considering to what extent up to nine of its A340s could be operated at substantially lower unit costs, either on new routes or on routes currently threatened with closure. Negotiations are underway with staff to discuss cost reductions required.
Other plans revealed by Lufthansa in a trading update include a move towards a joint venture with Air China. Additionally, Lufthansa's regional airline Eurowings will upgrade its fleet from regional jets to up to 23 A320s and open its first base outside Germany, in Basel, from next spring.