International Airlines Group has tapped German law firm Luther to guide its €20 million acquisition of Niki, although a pending legal challenge to the Austrian carrier’s insolvency proceedings could scupper the proposed tie-up, according to Air Berlin’s administrator.  

IAG confirmed on 29 December that it has offered €20 million to buy 15 Airbus A320s from Niki, as well as several of the insolvent carrier’s take-off and landing slots at airports in Vienna, Dusseldorf, Munich, Palma de Mallorca and Zurich, following the insolvency of the Austrian airline and its parent Air Berlin.

IAG – which owns British Airways, Aer Lingus, Iberia and Vueling – has also promised to pump in €16.5 million of extra liquidity to pay for Niki’s running costs, including the salaries of hundreds of its employees in Austria and Germany.

Lawyers at Luther and Austrian firm bpv Hügel set up a new Vienna-based subsidiary operating under Spanish low-cost carrier Vueling Airlines, which on 29 December entered into an agreement to buy Niki’s assets. M&A, aviation, insolvency and antitrust partners at Luther all advised on the deal, alongside the team at bpv Hügel.

The announcement of the proposed tie-up comes four months after Air Berlin filed for insolvency, following the removal of financial support from its main shareholder Etihad Airways. Air Berlin’s Niki subsidiary subsequently filed for insolvency last month, after Lufthansa backed out of its plans to acquire the Austrian carrier following resistance from the European Commission.

After Niki filed for insolvency, IAG entered the bidding process for the Austrian carrier’s assets, alongside three rival bidders, including Thomas Cook, Tuifly and former motor racing driver Niki Lauda, who first founded the airline.

Willie Walsh, IAG’s chief executive, said: “Niki was the most financially viable part of Air Berlin and its focus on leisure travel means it's a great fit with Vueling. This deal will enable Vueling to increase its presence in Austria, Germany and Switzerland and provide the region's consumers with more choice of low cost air travel.”

The Niki deal remains subject to approval from the European Commission and, at the time of writing, a legal challenge brought by the Fairplane passengers rights group, which filed separate petitions on 2 January to transfer Niki’s insolvency proceedings from Berlin to Vienna, arguing that it was wrong to begin Niki’s bankruptcy in Germany.

Fairplane wants to block proceedings in Germany and kickstart them in Vienna, where it claims there is a better chance of recovering more than €1 million that it says the Austrian carrier owes to passengers.

At a hearing on 4 January, the Charlottenburg Court in Berlin referred the complaint up to Berlin's Regional Court. If that court decides to reverse a December decision to allow Niki’s insolvency proceedings in Germany, such a ruling could scupper the sale of Niki to IAG, Air Berlin’s administrator Lucas Floether has said.

“If the complaint succeeds, the sale of Niki to IAG would be greatly endangered,” a spokesperson for Floether told Reuters.

IAG declined to comment when contacted by GTDT Aviation Law News.

IAG bid for Niki in December after Lufthansa withdrew its own proposed acquisition of the Austrian carrier, following a threat by the European Commission’s Directorate General for Competition to block the sale, warning that the tie-up would have harmed passengers in Germany, Austria and Switzerland.

Lufthansa offered a substantial remedies package to DG Comp in December in a bid to assuage the antitrust enforcer’s concerns. Lufthansa’s chief executive Carsten Spohr said at the time that the carrier was prepared to takeover Niki without any of its slots if it meant securing merger approval.

That remedies package did little to persuade DG Comp, which convinced Lufthansa to carve out the Niki acquisition from its wider buyout of Air Berlin’s assets last month. The European enforcer subsequently approved Lufthansa’s bid for Air Berlin’s regional subsidiary LGW on 21 December, conditioned on Lufthansa buying fewer landing slots at Düsseldorf airport than initially proposed.

IAG’s €20 million bid for Niki’s assets comes just a month after it bought Monarch Airlines’ take-off and landing slots at London Gatwick Airport. Monarch’s administrators KPMG confirmed the deal at the end of November, but did not disclose how much IAG had agreed to pay under the required slot swap arrangement.

Counsel to IAG

Luther

Partners Andreas Kloyer and Christian Rodorff in Munich, Susanna Fuchsbrunner and Andrea Metz in Frankfurt, and Helmut Janssen in Brussels

bpv Hügel

Partners Elke Napokoj, Stefan Gaug, Michaela Pelinka and Christian Schneider in Vienna, and  Bernhard Schatz in Baden