Germany's Lufthansa says it has withdrawn its bid for the Niki division of bankrupt Air Berlin as it tries to secure European Union approval for its planned takeover of much of what was once the country's second-biggest airline.
The German government said it regretted Wednesday's development, which it said would lead to the bankruptcy and grounding of Niki.
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Air Berlin ended operations in late October, though Austria-based Niki continued flying. Germany's biggest airline, Lufthansa, plans to take over much of Air Berlin, while Britain's easyJet is to acquire a smaller part. The EU's executive Commission approved the easyJet deal on Tuesday.
Lufthansa said it had offered to give up slots but the Commission "considers this to be insufficient" and clearly indicated that it wouldn't currently approve the acquisition of Niki.