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Austrian court deals further blow to planned Niki sale to IAG

Reuters  |  VIENNA 

By Knolle and Nasralla

VIENNA (Reuters) - Airline Niki's sale to parent was thrown into further doubt on Friday when a battle between Austrian and German officials over who should handle its insolvency proceedings intensified.

filed for insolvency in last month after Germany's scrapped plans to buy the Austrian arm of insolvent Air

After hurried talks to find a new owner for before it lost its valuable runway slots, agreed to buy the business and make it part of low-cost unit

However, the deal was put at risk after a German said this week that was not under German jurisdiction.

An Austrian in the town of on Friday approved a request by passengers' group Fairplane, which argued that as is registered in the case should be handled there.

also saw a conflict of interest in appointing the same administrators for and its German parent and debtor Air

"The main proceedings will take place in Austria," a said on Friday. According to national law, the case has to start from scratch after the ruling.

Niki's newly appointed Austrian said she would cooperate with her German counterpart and aimed to find a solution for the carrier within three weeks.

"We will not start from the beginning as if there had never been proceedings in this case," Reisch told Reuters, adding that she will consider the deal but was also open for new deals if they were better.

"I think a solution can be found within two to three weeks," Reisch said.

German Lucas Floether, however, said he was considering legal action against the neighbouring country's decision, having already agreed the deal with

"The opening of this case contradicts European insolvency regulation," he said in a statement.

IAG, which had committed to pay the January salaries for staff, said it was monitoring the situation.

owes 153 million euros to around 200 creditors, according to Austria's creditors body KSV 1870.

Fairplane, which said it has claims of 1.2 million euros against for 3,000 passengers, welcomed the Austrian court's decision.

"This is an important decision to minimize damage at and to safeguard passengers rights," said in a statement.

(additional reporting by in London, editing by and Keith Weir)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Fri, January 12 2018. 22:50 IST