German airline Lufthansa Group has dropped its plan to purchase Niki Luftfahrt, the Austrian subsidiary of collapsed carrier Air Berlin.

The withdrawal decision was made after the European Commission (EC) in its phase one assessment expressed concern over the deal, which was signed in October.

Lufthansa has already informed Air Berlin about its decision not to pursue the acquisition agreement of Niki.

“In the so-called phase one assessment, Lufthansa had already offered extensive commitments in particular by giving up slots.”

The company previously transferred a share of the agreed value of the transaction as bridge financing and is planning to spend the remaining share for expanding the organic capacity in Niki’s markets.

Lufthansa said in a statement: “In the so-called phase one assessment, Lufthansa had already offered extensive commitments in particular by giving up slots.

“However, the EC 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.”

Following the failed acquisition bid of Lufthansa, NIKI Luftfahrt has filed a petition for insolvency with the local court of Berlin-Charlottenburg in Germany.

The airline has also revealed its plan to discontinue flights operations for the time being.

Lufthansa also intends to complete the proposed €18m acquisition of Luftfahrtgesellschaft Walter (LGW) from Air Berlin, which filed for insolvency in August.

The transaction is subject to regulatory approvals.