The merger plans of Lufthansa's Germanwings unit and of TUI's TUIfly division are set to include Eurowings too, people familiar with the talks said on Thursday.

The parties plan to build a larger alliance that also involves Eurowings as a third airline, it was said.

Building entrepreneur Albrecht Knauf, who holds a majority stake in Eurowings, may also take a stake in the possible new entity. Lufthansa owns 49 percent of Eurowings but has all the voting rights and operates the regional airline.

Lufthansa, Germanwings and TUIfly declined to comment.

Sueddeutsche Zeitung newspaper reported in a pre-released article from Friday's edition, citing unidentified people in the industry, that Lufthansa and TUI agreed to hold 40 percent of the merged entity each and Knauf 20 percent.