Austrian leisure carrier Niki has filed to open insolvency proceedings and grounded flights after Lufthansa was forced to drop its acquisition of the carrier from insolvent parent Air Berlin amid European competition concerns.

Air Berlin had already warned that Lufthansa's was the only "viable" bid for Niki and that the carrier would have to file for bankruptcy if the European Commission failed to clear the acquisition before 21 December.

"Following the failed acquisition of Niki by entities of the Deutsche Lufthansa group and as no other purchaser could be found at short notice, the management of Niki today filed with the local court of Berlin-Charlottenburg a petition for the opening of insolvency proceedings over the assets of Niki," Air Berlin says in a statement. "Niki will discontinue to operate further flights for the time being."

A statement of the Niki website says its flight operations under the "HG" IATA airline code will cease as of 14 December.

"Passengers who have booked their flight with a tour operator are kindly asked to contact their tour operator directly," it says. "Several airlines are currently looking into solutions for bringing back passengers on standby-basis for a small fee from destinations back to Germany, Austria and Switzerland. To our regret, TUIfly will not participate in this solution."

Lufthansa earlier today dropped its bid for Niki after saying the European Commission had indicated it would not currently approve the acquisition on competition grounds. It will instead focus on submitting revised concessions to the Commission with a view to completing its acquisition of another Air Berlin unit, LGW.

The German government, which provided a bridging loan through German bank KfW to Air Berlin when it filed for insolvency in August to help keep it afloat during restructuring efforts, says it regrets the Commission decision.

"Alternative buyers for Niki were and still are not available, despite all sorts of public announcements and intensive efforts by the chief representative of Air Berlin," it says in a statement. "Insolvency and the grounding of Niki are now the result. This is especially hard for the employees. Nevertheless, in the overall view of the insolvency process of the Air Berlin Group, it has been possible to retain part of the formerly 8,000 employees in employment.

"Due to the unexpected loss of proceeds from the Niki sale, KfW's loan to Air Berlin guaranteed by the federal government may only be partially repaid," it adds.

Noting that Lufthansa still plans to complete the purchase of LGW, Air Berlin says the purchase price of approximately 18 million will be subject to adjustments upon closing of the transaction and "must be used essentially for a repayment of the priority loan granted by KfW".

Source: Cirium Dashboard