Lufthansa has confirmed it is in talks with TUI Travel and Thomas Cook on a potential three-way merger of the travel groups’ German airlines and Lufthansa-owned low-cost carrier Germanwings.

A successful merger would bring together TUIfly, Germanwings and Thomas Cook-owned Condor, in which Lufthansa has a 25% stake, to create a carrier to rival Air Berlin, EasyJet and Ryanair in Germany.

TUI Travel and Thomas Cook issued identically worded statements confirming the talks yesterday, noting that no commercial terms have been agreed and that there is no certainty of a transaction going through. Any merger would require the approval of the German cartel office and probably European competition authorities.

TUI operates its airlines under the TUIfly brand across Europe except in the UK, where it flies as Thomsonfly. Any merger would be confined to Germany and not involve Thomsonfly or Thomas Cook Airlines.

Talks began after Thomas Cook called off a deal to merge its German airline Condor with Air Berlin on July 11. There has been speculation in Germany since July that Thomas Cook would join talks already in progress between TUIfly and Lufthansa.

Germanwings is the low-cost arm of Lufthansa regional carrier Eurowings. There is no suggestion at this stage that Eurowings would be part of any deal.