A Berlin court has rebuffed a legal challenge to the insolvency filing of airline Niki, which could derail the sale of the Air Berlin unit to Aer Lingus owner IAG.

The case was also referred to a higher court for a ruling. 

Niki filed for insolvency in Berlin last month after Germany's Lufthansa scrapped plans to buy the Austrian unit, grounding the airline's fleet and stranding thousands of passengers.  

Following hurried talks to find a new owner for Niki before it loses its valuable runway slots, British Airways owner IAG agreed last Friday to buy the business and make it part of its low-cost unit Vueling. 

But Fairplane, a group representing airline passengers, said this week it had filed legal cases to have the insolvency proceedings for Niki shifted to Austria from Germany, which could unravel the sale. 

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

The Charlottenburg court said today it still believed that Niki was in its jurisdiction because its "centre of main interest" was in Berlin, where parent Air Berlin was based, according to a statement by Berlin's civil courts. 

Passengers who booked tickets for Niki flights entered a contract with the parent, Air Berlin, it said. 

The higher court, Berlin's regional court, will rule on the matter shortly, the statement said, without being more specific. 

IAG declined to comment on the matter.