1ST LEAD Lufthansa abandons takeover bid for Austria's Niki airline By Andrew McCathie, dpa

Berlin (dpa) - Austrian low-cost airline Niki said Wednesday it had cancelled a string of flights as it faced up to the threat of insolvency after German carrier Lufthansa withdrew its takeover offer for the group.The German government said it now expects the Vienna-based airline to file for bankruptcy and to end its operations, throwing into doubt the jobs of about 10,000 employees."The end result is now insolvency and the grounding of Niki," said German government spokesman Steffen Seibert, with Niki announcing a series of cancellations of flights scheduled for Thursday from its hub in Vienna. The International Airlines Group, which owns British Airways and Iberia, as well as travel group Thomas Cook‘s airline Condor have both in the past expressed an interest in acquiring the Austrian airline, which was founded by former Formula One champion Niki Lauda.But Seibert said: "Alternative buyers for Niki were and are still not available, despite a series of public notices and the intensive efforts by Air Berlin‘s general agent." Air Berlin‘s general agent Frank Kebekus was appointed shortly after the airline announced its insolvency in August. Niki has mainly served European and North African vacation destinations.Lufthansa said it was abandoning its bid to acquire the offshoot of the now insolvent Air Berlin after the move was rejected by the European Commission on competition grounds."Lufthansa informed Air Berlin and its insolvency managers that it will pursue the planned transaction without the purchase of Niki," Lufthansa said in a statement.The EU commission defended its decision in a statement, saying its role was "to make sure that mergers do not make consumers worse off.""It was clear from the start that Lufthansa and Air Berlin overlap on a very significant number of routes, with clear risks to Austrian, Germans and Swiss consumers and to effective competition." The commission also said that "the current uncertainty for Niki employees and passengers stems from Air Berlin‘s insolvency after long years of financial difficulty," as well as Lufthansa‘s decision to drop the transaction. "It is regrettable, in particular because this was not the only possible outcome since the start of the sales process," the commission said, adding that usually competition concerns in merger cases can be addressed by offering "adequate remedies." Lufthansa moved in to take over the bulk of Air Berlin‘s operations in the wake of the collapse in August of the nation‘s one-time second biggest carrier.Air Berlin‘s insolvency came after its main shareholder, Abu Dhabi-based Etihad Airways, withdrew financial aid for the loss-making carrier.On Tuesday the commission approved the takeover of certain Air Berlin assets by the British low-cost carrier Easyjet, saying that the plans will not reduce competition.