Germanwings Flight 4U 9525 was traveling to Dusseldorf, Germany, from Barcelona, Spain, when it is reported to have sent out a distress signal. It crashed near Barcelonnette, a town in the Alpes de Haute-Provence.
In a press conference, a representative for the budget German airline said there were 144 passengers, including two babies and a school party of 16 children, and six crew members on board.
Some 67 of the passengers are believed to be German, the company said, although it stressed this number could change.
A spokeswomen from German town of Haltern said there was reason to believe that 16 schoolchildren and two teachers were on board the plane, although this is not confirmed, according to Reuters.
A team of representatives from Germanwings, Lufthansa and Airbus is on its way to the crash site, and the company said it would seek to find out "as quickly as possible" why the plane had crashed.
It is not yet known why the accident, which occurred at 11:20 a.m. local time (6:20 a.m. ET), took place.
A representative for Germanwings said at the airline's press conference the plane fell into a steep descent which lasted for eight minutes, Reuters reported. The budget airline is owned by Lufthansa , which took delivery of the plane in question in 1991. This crash is the first since the subsidiary was launched in 2002.
French police captain Benoit Zeisser told CNBC that official helicopters had located the crash site, which is not easily accessible. He said he expected the police and fire brigade to be at the location in a matter of hours.
France's interior minister, Bernard Cazeneuve, headed to the crash site Tuesday, and German Chancellor Angela Merkel said she would travel there on Wednesday.
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The weather conditions were not bad at the time of the crash, according to Zeisser.
Lufthansa tweeted that it did "not yet know" what had happened to the flight.
"If our fears are confirmed, this is a dark day for Lufthansa. We hope to find survivors," Chairman and CEO Carsten Spohr said.
Shares of Airbus (Euronext Paris: AIR-FR) fell up to 2 percent on Tuesday, while shares of Lufthansa slipped up to 4.6 percent.
Aviation expert Michael Boyd, chairman of The Boyd Group consultancy, told CNBC there were no known issues with Germanwings.
"Anything involved with Lufthansa is going to be clean as a whistle as far as maintenance and operations goes," he said on CNBC's "Squawk Box."
"There hasn't been anything untoward with the A320 series. ... It's a very reliable airplane."
The A320 is a commonly used twin engine single aisle aircraft that seats 150 passengers.
The plane that crashed was delivered to Lufthansa in 1991. The aircraft had flown around 58,300 flight hours across 46,700 flights, according to Airbus.
-CNBC's Katy Barnato contributed to this report