안타까워요 is the present tense conjugation of 안타깝다(adj) in mid-level politeness..
안타깝다 is like half "I'm sad/sorry" and half "It pains me to see (someone suffering)".
It has a more "active" sense of feeling for someone and wanting to change things if possible.
1 강아지가 죽어서 너무 슬펐다 - I was so sad because my dog died.
2 친구가 시험에 떨어져서 안타깝다 - I feel so bad that my friend flunked the screening test.
They are similar, but 안타깝다 works better for situations that are still going on.
In 1), nothing can be done about it while in 2), the friend will probably try again to achieve his goal.