The European Commission Friday cleared Deutsche Lufthansa AG's (LHA.XE) plan to buy Austrian Airlines AG (AUA.VI), subject to conditions.

To remove competition concerns, Lufthansa must reduce the number of flights from Vienna to Frankfurt, Munich, Stuttgart, Cologne and Brussels, allowing new entrants to offer flights on those routes.

The deal with Lufthansa is seen as key to maintaining the solvency of Austrian Airlines, which has been hit hard over the last year, first by soaring oil prices and then the global economic crisis.

Lufthansa is proposing to pay EUR4.49 a share for Austrian Airlines' outstanding share. The takeover will also receive help from the Austrian government in the form of EUR500 million in restructuring aid.

The commission also Friday approved the restructuring aid to Austrian Airlines under its strict state aid rules.

-By Matthew Dalton and Carolyn Henson, Dow Jones Newswires; +32 2 741 1487; matthew.dalton@dowjones.com