Deutsche Lufthansa AG dropped its plan to buy Austrian airline Niki from insolvent parent Air Berlin Plc after European Union regulators opposed the deal, leaving the leisure carrier at risk of folding and stranding thousands of travelers ahead of the Christmas travel rush. Finding a new owner for Niki was key to administrators’ plans to keeping two units of Air Berlin operating after the parent company’s collapse in October and repaying a 150 million-euro ($176 million) loan from the German government. However, EU antitrust officials were wary of granting Lufthansa too much market power and weren’t willing to clear the remedy package that Lufthansa proposed. Lufthansa said it will now stop financing Niki, which it had been keeping afloat at a cost of about 10 million euros a week. The German government said it regrets the EU’s stance and will do everything it can to limit the damage to taxpayers. “Insolvency and grounding of Niki are now the result,” government spokesman Steffen Seibert said in an emailed statement. “This will hit employees especially hard.” The European Commission called the failure of the deal “regrettable” Smaller Budget Lufthansa was seeking to acquire 81 Air Berlin aircraft, including about 20 planes at Niki, as part of the smaller German carrier’s liquidation. Spokesman Martin Leutke said it isn’t yet clear how a planned investment budget of 1.5 billion euros will change, but it won’t be the same, and Lufthansa is planning to move forward without the Niki aircraft. Lufthansa was ready to transfer some of Niki’s landing rights to leisure-travel operators Thomas Cook Group Plc and TUI AG to satisfy EU regulators, people familiar with the plans said on Tuesday. In the wake of the failed Niki pursuit, Lufthansa is offering relinquish “numerous slots” to gain clearance for the purchase of Air Berlin’s Luftfahrtgesellschaft Walter division. Instead of buying Niki, Lufthansa will focus on expanding its Eurowings discount brand without acquisitions, the German airline said Wednesday in a statement. The European Commission “has clearly indicated that an acquisition of Niki and its integration into the Eurowings group would currently not be approved,” even with previous concessions on takeoff and landing times, Lufthansa said. The carrier didn’t specify terms for disposing of the slots, including any airlines that might obtain them. Air Berlin said separately that it’s looking at alternatives for the unit. Lufthansa’s purchase of the Luftfahrtgesellschaft Walter business, a regional turboprop operator known as LGW, would generate 18 million euros, to be applied to repaying the German government loan, Air Berlin also said.