Austrian airline's grounding strands thousands

Simon STURDEE


Austria began Thursday organising the repatriation of thousands of passengers stranded by the grounding of the airline Niki after Lufthansa (Xetra: LHAB.DE - news) dropped plans to buy it.

Niki, whose roughly 20 planes served resorts in southern Europe and north Africa, ceased operations late Wednesday after applying to open insolvency proceedings.

This followed Germany's Lufthansa dropping its interest in acquiring Niki together with large parts of Niki's parent company Air Berlin (LSE: 0GPE.L - news) because of EU competition concerns.

Air Berlin triggered bankruptcy proceedings in August after losing a cash lifeline from its biggest shareholder, Etihad Airways, and was grounded in October.

The European Commission said Wednesday that Lufthansa's move was "regrettable".

But it said that its offer to buy of 81 aircraft from Air Berlin's 140-plane fleet plus Niki for 210 million euros ($250 million) posed "clear risks to Austrian, German and Swiss consumers and to effective competition".

Lufthansa had already offered to give up many of the precious takeoff and landing slots it originally wanted under the deal, but Brussels saw this as "unsatisfactory", the airline said.

Niki's founder Niki Lauda, the Austrian former Formula One champion, said on Thursday he was potentially interested in acquiring again the airline he sold to Air Berlin in 2011.

However the 68-year-old told Oe1 public radio, from his car, that the situation was "complicated".

Earlier this year he made an offer for Niki together with Condor, part of Britain's Thomas Cook (Frankfurt: A0MR3W - news) , but he said on Thursday that he would now operate alone.

Wolfgang Katzian from trade union GPA told public radio that there were "three to four" other potential interested buyers for Niki, which employs some 1,000 people including 210 in Germany.

Thomas Cook indicated Thursday its possible interest in "some of the Niki assets". This could include "people needed to operate those assets," a spokesman said.

Irish low-cost giant Ryanair is meanwhile eyeing some of Niki's slots, Bloomberg News reported.

- 10 million a week -

Lufthansa has been keeping Niki in the air with around 10 million euros per week.

Austria's Transport Minister Joerg Leichtfried said Thursday that up to 10,000 passengers could be stranded over the next two weeks but a spokesman later put the number at just over 5,000.

An insolvency administrator appointed by a Berlin court to handle the case said Thursday that 40,000 people had been due to fly home with Niki over the next two weeks.

Until its grounding, the airline flew mostly out of Austria but also from Germany and Switzerland, with the Balearic Island of Mallorca a major destination.

Efforts were underway Thursday to find space on existing flights operated by other airlines, and additional charter flights would then be organised if needed, the Austrian ministry spokesman said.

Leichtfried, the transport minister, said Thursday that the government was considering providing "interim financing" for Niki.

Niki is just the latest European carrier to fail in recent years as competition from low-cost operators hits profits.

As well as Air Berlin, in October Monarch Airlines became Britain's biggest airline to fail, stranding some 110,000 holidaymakers abroad.

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