UPDATE 1-Austrian Air needs 1 bln eur if Lufthansa fails

* AUA management paints dire picture without Lufthansa

* Lufthansa, EU in war of nerves over antitrust concerns

* Sale necessary in any case, restructuring painful

(Adds details, AUA CEO comments)

VIENNA, July 14 (Reuters) - Austrian Airlines (AUAV.VI) would need fresh capital of more than 1 billion euros ($1.4 billion) if a planned takeover by German airline Lufthansa (LHAG.DE) 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 Austrian Airlines (AUA) 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.

The shareholder meeting was scheduled to approve a set of measures that are part of the Lufthansa takeover. [ID:nLH538531]

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.

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. [ID:nLD662980]

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. (Reporting by Alexandra Schwarz; Writing by Boris Groendahl; Editing by David Holmes) ($1=.7149 Euro)