VIENNA (Reuters) - Austrian holiday airline Niki's 850 employees braced for a bumpy ride as insolvent parent Air Berlin AB1.DE began talks on Friday to sell its assets before it runs out of cash.

Airline Niki founder Niki Lauda attends a news conference in Vienna November 8, 2011. REUTERS/Herwig Prammer

German flagship carrier Lufthansa LHAG.DE was scheduled to hold discussions about buying parts of Air Berlin ahead of other potential bidders, a senior labour union official told Reuters on Thursday.

Media said Lufthansa was interested in taking over major parts of Air Berlin as well as Niki. However, Niki labour bosses said on Friday that the brand’s future was unclear and it was not known whether the Austrian carrier would be sold separately from Air Berlin’s assets or as part of a package.

Niki, founded by former Formula 1 race car driver Niki Lauda, is not part of the insolvency proceedings but depends on cash from Air Berlin to cover its costs.

Union representative Peter Stattmann told journalists all bills had been paid so far but that the next “litmus test” would be August wages in the two-digit millions of euros, due at the end of the month.

“We were promised (these wages). We will see if it will happen that way,” he said after a staff meeting at Vienna Airport.

The chancellery and the transport ministry in Austria, which like Germany faces federal elections in autumn, said they stood ready to support Niki should it face a financial bottleneck.

“We won’t leave anyone out in the cold,” Transport Minister Joerg Leichtfried said.

CARVE-UP

The pressure is on to complete talks to carve up Air Berlin quickly because a 150 million euro ($176 million) bridging loan it received from the German government will keep its planes flying for only up to three months.

A person familiar with the matter told Reuters on Thursday that Lufthansa could take on as many as 90 of Air Berlin’s roughly 140 leased planes, including those of Niki, which is seen as one of the carrier’s most valuable assets.

Air Berlin has held preliminary talks with two other firms besides Lufthansa, its Chief Executive Thomas Winkelmann told Frankfurter Allgemeine Zeitung this week, without elaborating.

Earlier in the week, a source familiar with the matter said easyJet EZJ.L was among those in talks, and Thomas Cook's TCG.L German airline Condor said it was ready to play "an active role" in Air Berlin's restructuring.

Airline entrepreneur Hans Rudolf Woehrl, who made a name for himself when he bought German airline Deutsche BA from British Airways for 1 euro, also threw his hat in the ring on Friday.

With the backing of partners and financial investors, he aims to take over Air Berlin as a whole and keep it flying as an independent airline, his company INTRO-Verwaltungs GmbH said.

Lufthansa’s deputy chair Christine Behle, who represents labour union Verdi on the company’s supervisory board, told Reuters on Thursday that she expected it to take at least a week or two until a carve-up deal had been agreed.

($1 = 0.8518 euros)