(Corrects first bullet point, second paragraph to show CEO was referring to the history of Berlin, not Air Berlin)
* CEO sees milestone in history of Lufthansa, Berlin
* Source has said Lufthansa will buy Niki, LG Walter
* Air Berlin also in talks with easyJet
* Shares in Lufthansa rise nearly 3 pct
BERLIN, Oct 12 (Reuters) - Lufthansa will sign a deal on Thursday to buy parts of its insolvent smaller German rival Air Berlin, Lufthansa’s chief executive Carsten Spohr said.
“We will see a milestone in the history of Lufthansa and Berlin today,” he said.
Air Berlin, which has struggled to turn a profit over the last decade, filed for insolvency on Aug. 15, and a government loan has kept its planes in the air while its administrator negotiates with prospective buyers for various parts of the business.
It said late last month that negotiations with Lufthansa and Britain’s easyJet would continue until Oct. 12.
A person familiar with the matter said on Wednesday that Lufthansa, Germany’s largest airline, was set to buy Air Berlin’s Austrian leisure travel airline Niki, its LG Walter regional airline and also acquire some additional short-haul aircraft.
The operations up for grabs also include access to take-off and landing slots at Air Berlin’s hubs in Tegel in the German capital and Duesseldorf.
EasyJet, which has a base at Berlin’s Schoenefeld airport, has been discussing acquiring 27 to 30 planes, though a media report earlier this week said talks could fail.
Spohr said on Thursday he expected Lufthansa’s imminent deal with Air Berlin would get European Union approval by the end of the year.
Shares in Lufthansa were up 2.9 percent at 25.27 euros, the top gained in Germany’s DAX market index by 0800 GMT after Spohr’s comments and upbeat notes from brokerages.
Analysts at Bernstein Research raised their rating on Lufthansa’s shares to “outperform” from “market-perform”, saying they expected a deal with Air Berlin to add around 70 to 90 million euros to annual operating profits at Lufthansa’s budget unit Eurowings in the medium term.
HSBC analysts lifted their target share price to 29 euros from 25 euros, citing the imminent agreement with Air Berlin, a new multi-year labour deal with pilots announced this week and a positive trading performance this year.
Air Berlin, Germany’s second largest carrier, will cease operating flights this month, capping a turbulent summer for European carriers.
Italy’s national airline Alitalia is in administration and seeking investors too, British leisure airline Monarch collapsed at the start of this month. (Reporting by Klaus Lauer; writing by Maria Sheahan; editing by Victoria Bryan, Greg Mahlich)