FRANKFURT/VIENNA (Reuters) - British IAG (>> International Consolidated Airlines Group) is in exclusive talks to buy Niki, Air Berlin's (>> Air Berlin Plc) insolvent Austrian airline, a source close to the process said on Thursday, after Niki's administrator said that one bidder out of four remained.
Besides IAG, the owner of British Airways and low-cost carrier Vueling, bidders for holiday airline Niki included tour operators TUI <TUIT.L>, Thomas Cook (>> Thomas Cook Group) and former Formula One world champion Niki Lauda.
"IAG is the last remaining bidder and is still negotiating now," the source said, adding that the company had put in the highest offer - a double-digit million-euro amount. German newspaper Bild put the figure at around 40 million euros ($48 million).
Niki Lauda, Niki's founder, was quoted as saying on the website of newspaper Die Presse that he was out of the running. A source said Thomas Cook was also out of the race.
Die Presse also reported, without citing sources, that IAG was likely to be the last bidder. IAG and Thomas Cook's Condor subsidiary declined to comment on Thursday. TUI was not immediately available to comment.
"The provisional creditors' committee for Niki (...) today decided to continue sales negotiations for the business operations of the company exclusively with one bidder for now," the spokesman of administrator Lucas Floether said in a statement.
"(The committee) tasked the provisional administrator Floether to conclusively negotiate the purchase contract over the coming days," the statement added.
The spokesman declined to give further details.
Austrian news agency APA quoted an internal letter sent by Floether and the Niki management to its employees that the new investor would not split up the company's business and would keep most of its employees.
The new owner will have to pay Niki's running costs, including salaries for its roughly 1,000 employees in Austria and Germany, from the beginning of January, Floether said on Wednesday.
Niki was part of collapsed Air Berlin. Niki filed for insolvency after Germany's Lufthansa (>> Lufthansa Group) dropped a plan to buy the assets of the Austrian airline on competition concerns, grounding the fleet and stranding thousands of passengers.
The administrators have been racing to find an alternative buyer for its assets before it loses its take-off and landing slots, its most attractive assets.
(Reporting by Shadia Nasralla, Ilona Wissenbach and Georgina Prodhan, additional reporting by Andy Bruce; Editing by Elaine Hardcastle and Gareth Jones)
By Ilona Wissenbach and Shadia Nasralla