Niki (HG, Vienna) is facing bankruptcy after Lufthansa Group announced it is dropping its takeover bid. The Austrian carrier has since announced it will cancel all flights effective December 14.

Lufthansa's bid for Niki was a part of the larger Air Berlin takeover plan but was blocked by the European Commission on competition grounds. The European regulator feared that Lufthansa Group, which also owns Austrian Airlines and Swiss, would gain a monopoly on most routes in Germany and Austria.

"In the so-called Phase One assessment, Lufthansa had already offered extensive commitments in particular by giving up slots. However, the Commission considers this to be insufficient and has clearly indicated that an acquisition of Niki and its integration into the Eurowings Group would currently not be approved. Based on this assessment, a takeover of Niki by Eurowings is no longer being pursued", the German group said in a press statement.

Air Berlin had previously stated that Lufthansa's offer for Niki was the only option to keep the airline operational as bids from IAG International Airlines Group and Thomas Cook Airlines UK had fallen through. The Austrian carrier depended on Lufthansa's bridge funding of around EUR10 million a week to continue operations after its previous owner, Air Berlin, had gone bankrupt.

According to the ch-aviation capacity module, the Austrian airline currently operates 312 flights weekly mostly out of Düsseldorf Int'l.

Lufthansa is also prepared to give up on even more landing slots previously owned by Air Berlin Group. It can transfer them to Thomas Cook and TUI Group, sources told Bloomberg newswire.

The German group still intends to take over LGW - Luftfahrtgesellschaft Walter, another Air Berlin subsidiary. The original deal also included eighty-one aircraft, most of the landing slots, traffic rights and around three thousand employees from the Air Berlin group subsidiaries. The bid was valued at EUR210 million (USD250 million) but this sum is likely to get reduced now that Niki has been excluded from the takeover.

The European Commission has until December 21 to approve the takeover, but can also initiate in-depth proceedings which could then take another 90 days.