The planned takeover of Air Berlin businesses Niki and LGW had raised concerns among rivals that Lufthansa would become too dominant in Germany.
Lufthansa said it would still pursue its growth plans for its Eurowings low-cost business but would do so without the Niki acquisition.
But they said on Tuesday that no suitable offers were ready and that unless the deal was approved quickly, Niki would have to follow its parent and file for insolvency protection itself.
Lufthansa said it still planned to buy Air Berlin subsidiary LGW and would submit a revised proposal, including foregoing slots, to the Commission on Wednesday.
The purchase price for LGW on its own is around 18 million euros ($22 million), Air Berlin said, compared to a previous price of 210 million euros for the deal including Niki.
The German government had been expecting to use the sale proceeds to repay a bridge loan it awarded to Air Berlin to keep it flying after it filed for insolvency protection.
Trackback from your site.