Although parent Air Berlin filed for insolvency in August, Niki, which has a fleet of 21 Airbus A321 aircraft, was not part of those proceedings.

Lufthansa agreed a deal in October with Air Berlin to buy the unit, plus sister company LGW, and had been providing funding to keep Niki flying until the deal was approved by the EU.

But Lufthansa said on Wednesday the European Commission had indicated the deal wouldn't be approved and it was dropping its plans to buy Niki.

(Reporting by Klaus Lauer; Writing by Victoria Bryan; Editing by Arno Schuetze)

Stocks treated in this article : Lufthansa Group, Air Berlin Plc