Insolvent Austrian airline Niki is being bought by the IAG Group for €20 million, with the company planning to run it as a new subsidiary of its Spanish budget carrier Vueling.

Around 740 former Niki staff will be retained, with the purchased assets including approximately 15 Airbus A320 aircraft, as well as highly valued airport slots in locations including Vienna, Munich, Dusseldorf, Zurich and Palma. The deal remains subject to approval by European authorities.

IAG, which also owns British Airways, Iberia and Aer Lingus, will also provide additional liquidity to the former Air Berlin subsidiary of up to €16.5 million.

Willie Walsh, IAG’s chief executive, said in a statement: “Niki was the most financially viable part of Air Berlin and its focus on leisure travel means it’s a great fit with Vueling. This deal will enable Vueling to increase its presence in Austria, Germany and Switzerland and provide the region’s consumers with more choice of low-cost air travel.”

IAG became the only remaining bidder late last week after other contenders dropped out. Those included original Niki founder and former Formula One racing champion Niki Lauda, as well as Thomas Cook and Tui.

All had entered the race after Germany’s Lufthansa pulled out of a potential acquisition of Niki’s assets as part of its larger Air Berlin purchase following pressure from the European Union’s competition authorities. Niki, founded in 2003, stopped flying on 14 December after Lufthansa dropped its plans to acquire it.