Niki Lauda Quits as CEO of Lauda Air

Former Formula One racing world champion Niki Lauda resigned on Tuesday as chief executive of Lauda Air, after auditors criticised alleged financial irregularities at the airline he founded in 1979.

The resignation followed a bitter public struggle for control of Lauda Air between its 51-year-old founder and Austrian Airlines, its largest shareholder, which was unhappy with his running of the airline.

Austrian Airlines said earlier this month it aimed to wrest control of Lauda Air from its CEO by buying Lufthansa's 20 percent stake. It wants to restructure Lauda to stem mounting losses caused by soaring fuel prices and the strong dollar.

Niki Lauda said auditors KPMG, brought in to examine the company's finances after a dispute over its impending losses, had been critical of the company's mechanisms for monitoring currency swap transactions.

"This was described as a gross violation of duty by the entire board of directors," he told ORF radio. "As this allegation was aimed at the whole board I took the consequences ... and resigned today."

He indicated he did not feel personally at fault, saying he had been responsible for operations while currency transactions were the responsibility of the finance director.

In a written statement, Lauda said: "I leave open the question of whether the criticism is justified, how it should be judged and if any allegations touch me personally."

Fight Over Losses

Responding to Lauda's resignation, Austrian co-Chief Executives Herbert Bammer and Mario Rehulka said: "Austrian Airlines will take the necessary steps to ensure a long-term effective rescue package for Lauda Air as well as to bring the group into a newly designed group structure."

The fight for control of Lauda Air became public last month after Niki Lauda announced that he expected the airline to report a loss of 558 million schillings in the year to October 31.

Austrian Airlines said he was understating the likely loss, which it forecast at around one billion schillings. It was unhappy with Lauda's plan to offset the loss through a 1.1 billion schillings sale-and-leaseback arrangement on five aircraft.

As the two sides engaged in an increasingly acrimonious war of words, Austrian Airlines, which owns 36 percent of Lauda Air, said it intended to acquire Lufthansa's 20 percent stake, giving it control.

Lauda himself owns 30 percent and there is a free float of 14 percent.

Austrian Airlines believes that running areas such as planning, maintenance and personnel centrally could produce savings of 700 million schillings per year.

But it has pledged to maintain its three distinct brands - Austrian, Lauda and Tyrolean.

Asked if he thought his resignation meant the death of Lauda Air, Niki Lauda replied: "You will have to ask Austrian Airlines, I cannot say."

He said he was very sorry about what had happened because the company had many highly motivated staff who had built it up from scratch into an internationally known carrier with a fleet of aircraft.

He said he had not decided what his own future would be but he intended to continue flying as a pilot for Lauda, at least for some time.

Lauda formed Lauda Air, a charter company, in 1979 but it quickly collapsed. He returned to motor racing in 1982 and relaunched his airline shortly before retiring from racing in 1985 with a fleet of just two Boeing 737s.

Lauda Air stock, which is rarely traded, stood unchanged at 8.3 euros on volume of just 504 shares. Austrian Airlines ended 1.09 percent higher at 12.1 euros.