The sale of Austrian budget airline Niki to IAG, the owners of British Airways, is in doubt after Fairplane, a group representing airline passengers, filed a legal case to recover more than a million euros ($1.2 million) that it says Niki owes to customers.

Although the sum is relatively small, it could derail the €20-million sale that was agreed last week which would see Niki's operations transferred to IAG's low-cost operator Vueling, and IAG providing another €16.5 million in additional liquidity.

This could force a new legal process for the takeover, rendering the existing purchase contracts invalid, Niki spokesman Ronald Schmid confirmed:

"If the complaint before the Charlottenburg Court (in Berlin) succeeds, the sale of Niki to IAG would be greatly endangered."

Avoiding conflicts of interest

Schmid added that dragging Niki into the German insolvency process was wrong, and that passengers stood a better chance of getting their money back in the Austrian courts.

"We want to ensure that the insolvency is carried out in Austria, where it belongs, so that there are no conflicts of interest,"

Fairplane argues however that Niki, which is registered in as a company in Austria, had been profitable but had lost access to bridge financing when insolvency proceedings were opened in Germany in December, grounding planes and stranding passengers.

Niki employs around a thousand people, with IAG planning to retain around 740 of them when the takeover is complete, which IAG still hopes to complete by the end of February.

A ruling by the court on the case is due later this week.

mds/hg (Reuters, AFP)