Lufthansa scraps deal for Air Berlin's Niki

Lufthansa scraps deal for Air Berlin's Niki

Lufthansa had already offered to give up numerous precious takeoff and landing slots it originally wanted under the deal.

Lufthansa said it still planned to buy Air Berlin subsidiary LGW and would submit a revised proposal, including foregoing slots, to the Commission on Wednesday.

"The German government said that it "regrets... very much" the commission's decision on Niki".

The European Union said Friday it was concerned about the impact on competition of German airline Lufthansa's plan to take over routes operated by failed rival Air Berlin.

"Insolvency and grounding of Niki are now the result", government spokesman Steffen Seibert said in an emailed statement.

Niki has nearly 1,000 employees, and grounding the airline will result in tens of thousands of travelers being stranded, with hundreds of thousands of tickets becoming voided, Air Berlin said Tuesday.

But Brussels saw this as "unsatisfactory and signalled clearly that it could not allow taking over and integrating Niki into the Eurowings group", Lufthansa's low-priced subsidiary, the airline said.

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Its aircraft were kept aloft by a 150-million-euro emergency loan from the German government while it negotiated the sale of its assets. Air Berlin in 2004 first bought a stake in Niki, founded a year earlier by Formula One champion Niki Lauda, and in 2010 purchased the majority of the airline.

Lufthansa had said it would now stop financing the airline, which it had been keeping afloat with about 10 million euros a week since August, Bloomberg News reported.

"The government will do everything it can to limit the damage to the tax payer", he added.

Aside from Lufthansa, Niki attracted bids from International Airlines Group (IAG) and Thomas Cook.

EasyJet proposed to acquire certain assets and rights held by Air Berlin as part of its passenger transport operations at Berlin Tegel airport, including slots at Berlin Tegel airport and at some destination airports.

If Lufthansa's purchase of LGW can proceed the price will be around 18 million euros ($22 million), Air Berlin said, compared to a previous price of 210 million euros for the deal including Niki. That would leave the German government almost 100 million euros short.

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