Air Berlin, Germany's second-largest carrier, triggered bankruptcy proceedings in August after losing a cash lifeline from its biggest shareholder...
Niki said earlier that it had applied to open insolvency proceedings following Lufthansa's announcement that it had "informed Air Berlin and its insolvency managers that it will pursue the planned transaction without the purchase of Niki."
The decision came after the European Commission said last week that it had "deep competition concerns" about the Frankfurt-based carrier's plan to buy of 81 aircraft from Air Berlin's 140-plane fleet plus Niki for 210 million euros ($250 million).
Air Berlin, Germany's second-largest carrier, triggered bankruptcy proceedings in August after losing a cash lifeline from its biggest shareholder, Etihad Airways of the United Arab Emirates.
Its aircraft were kept aloft, until being grounded in October, by an emergency loan of 150 million euro ($175 million) from the German government while it negotiated the sale of its assets.
Meanwhile, Niki's planes had continued to fly as it was not subject to the same bankruptcy conditions as Air Berlin.
But Niki, which flies to holiday resorts in southern Europe and north Africa from Vienna and other cities in Austria and also Germany, said on its website its flights "will cease as of December 14."
It said that several airlines "are currently looking into solutions for bringing back passengers on standby-basis for a small fee from abroad destinations back to Germany, Austria and Switzerland."
It also told clients who have booked their flight with a tour operator to contact the operator directly.
The Austrian government said it was ready to repatriate any Niki passengers stranded abroad if necessary.
The European Commission said Wednesday that Lufthansa's move was "regrettable" and that withdrawing the bid completely "was not the only possible outcome".
But it added that Lufthansa's hoped-for buyout had presented "clear risks to Austrian, German and Swiss consumers and to effective competition".
Lufthansa had already offered to give up many of the precious takeoff and landing slots it originally wanted under the deal.
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-cost subsidiary, the airline said.
The German government said that it "regrets... very much" the commission's decision on Niki."
"There are no alternative buyers for Niki available at the moment despite all the efforts of the insolvency managers... insolvency and grounding will be the consequence," it added.
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 future of Niki, which has about 20 aircraft and 1,000 employees, is now highly uncertain.
Niki's founder Niki Lauda, the Austrian former Formula One champion, said he was "interested" in acquiring again the airline he sold to Air Berlin in 2011.
Lauda, 68, had made in September an unsuccessful offer of 100 million euros for Niki together with Condor, part of Britain's Thomas Cook.
But Lauda suggested to the Austria Press Agency that he would wait until Niki was declared insolvent before making a bid.
Niki's being grounded would add to Christmas period disruptions for European flyers, with the collapse of Britain's Monarch in October and with Ryanair hit by problems with pilots and facing strikes.