Airborne again Niki Lauda back in the cockpit of namesake airline

After months of creditors wrangling over its future, Austria’s insolvent budget airline Niki has returned to its founder, Formula One legend Niki Lauda.
He likes to win.

If there’s one thing Niki Lauda has never shied away from in his long, lustrous career as a Formula One racecar driver and aviation entrepreneur, it’s competition. And if there’s anything the 68-year-old Austrian champion hates most, it’s losing.

Once again, Mr. Lauda has crossed the finish line ahead of the pack, this time regaining ownership of the budget airline he launched in 2003. Administrators of the former Air Berlin subsidiary on Tuesday chose him over British Airways owner IAG in a tight bidding race. It was the third offer of the determined F1 legend to take control of his namesake airline, which filed for insolvency last month after Lufthansa scrapped plans to acquire it because of EU competition concerns. And the deal only came after two courts this month had ruled the insolvency proceedings had to be moved to Austria (where Niki has its main office) from Germany, throwing into doubt the previously agreed sale of the carrier to IAG.

“Laudamotion GmbH merged from a transparent bidding process as the best bidder,” the Austrian and German administrators announced in a statement. They said they expected swift legal approval of the transaction but provided no details of the bid’s terms.

If there’s anything the 68-year-old Austrian champion hates most, it’s losing

A ballpark figure could be the €20 million ($25 million) that IAG, as part of the Air Berlin’s liquidation procedure, had agreed to pay for up to 15 airplanes and a number of slots, in addition to €16.5 million to provide liquidity for the company. BA’s owner also intended to hire more than 700 of Niki’s 1,000 employees.

In a letter he published ahead of the bid, Mr. Lauda promised “job offers” for all employees of the company and that the company would be preserved in its entirety, headquartered in Vienna.

How excited the low-cost airline’s crew, especially its pilots, will be about the return of their former boss remains to be seen. Stefan Tankovits, head of the company’s work council, said ahead of the insolvency proceedings that Mr. Lauda doesn’t enjoy the highest standing among the pilots whom he hired as self-employed contractors through a leasing firm. Mr. Tankovits said he expected all 220 pilots to quit their jobs.

Labor issues aside, Mr. Lauda also faces fierce competition in the market for low-cost, no-thrills airfares. Last year saw a number of firms file for bankruptcy, including Britain's Monarch and Italian flag carrier Alitalia, in addition to Air Berlin and Niki. Experts say that consolidation in Europe's crowded aviation market is long overdue and argue that that carriers like Alitalia would have gone out of business long ago if they had not been propped up by governments in their home countries or by larger airlines.

But that market assessment hasn't kept German Economics Minister Brigitte Zypries from lauding the Niki deal. She called it "good for passengers and good for passengers."

John Blau is a senior editor with Handelsblatt Global. To contact the author: [email protected]