International Airlines Group has confirmed it has agreed to purchase assets of former Air Berlin subsidiary Niki.

IAG says it will pay €20 million and provide liquidity of up to €16.5 million to Niki. The transaction is being made by a newly formed subsidiary of Vueling, which will be incorporated as an Austrian company and will initially run as a separate operation, according to IAG.

The transaction, which is pending approval under EU competition laws, will include up to 15 A320 aircraft and a selection of slots at airports such as Vienna, Dusseldorf, Munich, Palma and Zurich. IAG says the new company plans to employ around 740 former Niki staff.

Lufthansa initially won the bid to purchase Niki along with several other Air Berlin assets, but relinquished the agreement in hopes of limiting the chances of the buy-out being blocked by competition authorities.

IAG chief executive Willie Walsh commented: “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 group says more details of the new subsidiary’s branding and route network will be released at a later date.

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