British Airways owner International Airlines Group is to buy assets of Austrian airline Niki, formerly part of the defunct Air Berlin group.

IAG is paying €20 million up front and will pump in up to a further €16.5 million to provide liquidity to Niki.

The deal is being made by a newly formed subsidiary of IAG-owned Spanish low cost carrier Vueling.

The new business will be incorporated as an Austrian company and run initially as a separate operation.

The assets include up to 15 Airbus A320 family aircraft and an “attractive” portfolio of take off and landing slots at various airports including Vienna, Dusseldorf, Munich, Palma and Zurich.

The new company plans to employ approximately 740 former Niki staff to run the operation.

More details about the new subsidiary’s branding and route network will be provided in due course, IAG said.

The takeover is subject to conditions including European Commission competition approval.

IAG chief executive Willie Walsh said: “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’s swoop follows easyJet acquiring parts of Air Berlin’s operations at Berlin Tegel airport and Lufthansa plans to acquire Air Berlin subsidiary LGW’s 33 aircraft for use by budget arm Eurowings.