A Berlin regional court (Landgericht) has ruled that Niki's bankruptcy proceedings should be conducted in the Austrian regional court in Korneuburg rather than in Germany, thus putting in jeopardy an IAG International Airlines Group takeover deal.

The ruling, issued on January 8, follows a complaint lodged by FairPlane, a passenger compensation claims company. According to the complaint, Niki's passenger rights would have been better protected if an Austrian court had jurisdiction over the airline's bankruptcy proceedings.

According to Austria's Kurier, the court argued that even though the majority of Niki's revenues were generated in Germany, the carrier conducted analysis, financial accounting, and other administrative tasks in Vienna, its main headquarters. It also underlined that the airline had an Austrian air operator's certificate (AOC) and its planes were subject to Austrian regulatory supervision. Additionally, it pointed out that the majority of Niki's 1,000-odd staff were employed under Austrian labour law and the company's management worked mostly at its offices in Vienna. According to the ruling, the fact that the airline was part of the German-registered airberlin group cannot be "a single decisive criterion" in establishing court jurisdiction.

The ruling effectively invalidates all decisions concerning Niki taken by Lucas Flöther, the airberlin group bankruptcy administrator appointed by the Berlin Charlottenburg district court. Among the key decisions the ruling affects is IAG's recent push to purchase Niki for EUR20 million (USD24 million). The court in Korneuburg will now reevaluate the takeover deal, which was signed on December 29.

Niki's AOC validity was recently extended by Austrocontrol for a further three months, meaning that the carrier will not lose its slots for the time being.

IAG has said it will continue to work with all parties to ensure the transaction goes through as planned. The group intends to eventually relaunch Niki as an Austrian-based unit of its LCC subsidiary, Vueling Airlines.

The Vienna-based Air Berlin subsidiary filed for bankruptcy in Germany in mid-December. The Berlin Charlottenburg court had earlier claimed that it should have jurisdiction based on the location of most of the airline's creditors, despite its Austrian registration.

Prior to the suspension of all operations on December 14, Niki operated mainly out of German airports, including Dusseldorf, Munich, and Hamburg Helmut Schmidt.