* AUA management paints dire picture without Lufthansa
* Lufthansa, EU in war of nerves over antitrust concerns
* Sale necessary in any case, restructuring painful
* AUA share rebounds 6 pct after Monday's 13 pct drop
(Adds Chairman on Lufthansa meeting, share price)
By Alexandra Schwarz
VIENNA, July 14 (Reuters) - Austrian Airlines would need fresh capital of more than 1 billion euros ($1.4 billion) if a planned takeover by German airline Lufthansa failed, Austrian Airlines' Chairman said on Tuesday.
This would be more than twice the 500 million euros ($699 million) in state aid that Austria would inject into its troubled national carrier as part of the Lufthansa deal, Chairman Peter Michaelis told a shareholders' meeting in Vienna.
"The capital need would be more than twice what we have applied for as state aid," Michaelis told the meeting. Michaelis is also head of AUA's main shareholder, Austrian state holding company OeIAG.
AUA lost 429 million euros last year and has piled up more than 1 billion euro in debt, or more than five times its equity. It only survived this spring due to a 200 million euro lifeline loan by the Austrian government, two thirds of which is used up.
The shareholder meeting was scheduled to approve a set of measures that are part of the Lufthansa takeover.
Lufthansa and the European Union's top antitrust watchdog are embroiled in a war of nerves over the deal. The European Commission fears the merger will hamper competition and raise airfares. Lufthansa is reluctant to give up lucrative routes.
Meanwhile, they are racing against a July 31 deadline after which Lufthansa can pull out of the deal. Michaelis said the transaction was in a difficult period but an agreement could still be reached if everybody tried hard.
"If all parties concerned really want it, the transaction can be closed in time," Michaelis said. He later told reporters that he was pinning his hopes on a Lufthansa board meeting underway on Tuesday to yield progress.
AUA stock gained back ground in Tuesday's session, trading up 6 percent at 3.70 euros after Monday's 13-percent fall. Volumes were thinner than in the previous two sessions.
The Commission on Monday said it doubted whether Lufthansa was still "genuinely interested" in the deal, given how little it had offered to allay competition concerns.
Lufthansa filed a new proposal last week which the Commission said was worse than what it had offered previously. Rival airlines opposed to the takeover include Air France-KLM, who lost out on AUA against Lufthansa last year, and Air Berlin , the main competitor on routes to Germany.
Any "Plan B" for a possible failure of the Lufthansa purchase would also result in the sale of AUA eventually, albeit an even more downsized version of it, the state-controlled carrier's co-chief executive said at the same meeting.
"If the closing (with Lufthansa) doesn't happen, the company must be downsized, loss-making routes must be cut, and aircraft and staff must be cut," AUA's Peter Malanik said. "A strategic partner will be needed for the 'plan B' as well." (Writing by Boris Groendahl; Editing by David Holmes and David Cowell) ($1=.7149 Euro)