Former Formula One champion Niki Lauda has agreed to buy back the Niki airline he founded after his bid was chosen ahead of an offer from Aer Lingus owner IAG, the Austrian company's administrators said. 

A previously agreed sale of Niki to IAG fell through this month after two courts ruled that the insolvency proceedings had to move to Austria from Germany. 

That cleared the way for other interested parties such as budget airline Ryanair and Lauda to bid for the carrier, which most recently was part of failed German airline Air Berlin. 

Niki's creditors met yesterday to pick the best bid, and their meeting ran past midnight. 

"In the early hours of this morning Laudamotion emerged from a transparent bidding process as the best bidder," Niki's Austrian and German administrators, Ulla Reisch and Lucas Floether, said in a brief joint statement, referring to a company controlled by Lauda. 

They said they expected legal approval for the transaction to follow soon. 

Niki Lauda, who founded the airline in 2003 and sold it to Air Berlin in 2011, said the involved parties had agreed to not disclose the purchase price. 

"Of course, I am delighted," Lauda said in an interview with Austrian broadcaster Oe24. "There's no doubt that I have always put my heart and soul into Niki." 

He said he secured 15 aircraft and planned to bring Niki back into operation by end of March. 

Lauda, who was three times Formula One world champion, moved into the airline industry as his driving career was coming to an end in the 1980s. 

All 1,000 Niki employees can hope to keep their jobs after Lauda improved an earlier offer and showed "commitment to Niki's base in Austria and openness to negotiating a collective agreement", Niki works council chief Stefan Tankovits said. 

Lauda said earlier that he would look to work with an operating partner such as Thomas Cook for functions previously provided by Air Berlin, such as ticket sales, crew planning and marketing.

The aviation industry has been in turmoil for over a year, with British airline Monarch, Italy's Alitalia and Air Berlin entering administration, following intense price competition in Europe.

Niki filed for insolvency in Berlin last month after Germany's Lufthansa scrapped plans to buy the Austrian arm of insolvent Air Berlin.

After hurried talks to ensure Niki retained valuable runway slots, IAG - which also owns British Airways and Iberia - agreed at the time with the German administrator that it would buy the business for €20m.

IAG said it would also provide €16.5m in liquidity to make Niki part of its low-cost business Vueling.

It accepted its defeat today. "IAG is disappointed that Niki will not be able to develop and grow stronger as part of the group," it said in a statement.