Berlin - The planned takeover of Thomas Cook's Condor airline by budget carrier Air Berlin has collapsed, both sides announced Friday, saying they had withdrawn their application to the German competition authorities.

The parties announced in September last year that Air Berlin would take over Condor by February 2010 in two steps in a deal valued at around 700 million dollars.

They cited "significantly changed economic framework conditions since the contract was concluded," noting that the price of jet fuel had more than doubled.

"At present, the parties involved intend to continue their discussions, without being subjected to time pressure," they said.

Thomas Cook said it continued to see Condor as a strong company with considerable potential and was considering a variety of options for the airline. It added that its share buyback scheme was on hold.

Under the original plan, Thomas Cook was expected to hold a little under 30 per cent of Air Berlin.

Air Berlin's expansion drive has raised questions among analysts, who suspected it was overreaching itself in difficult market conditions for the travel industry. (dpa)