Ryanair will fork out almost €100m to take a majority stake in Austrian airline Laudamotion, a carrier born from the ashes of the Niki airline that collapsed last year along with its parent, Air Berlin.
The price includes less than €50m for a 75pc holding in Laudamotion and €50m in working capital Ryanair will also provide to the carrier.
It's Ryanair's first acquisition since it bought Buzz in 2003 from KLM. Ryanair shut it down a year later.
Significantly, the Laudamotion deal also means that Ryanair now has Airbus aircraft in its traditionally Boeing fleet, albeit through a subsidiary.
Laudamotion is headed by its chairman, Formula One racing legend Niki Lauda, and is already advertising flights to Ibiza, Majorca, Palma and Greece.
He gazumped Aer Lingus owner IAG and Lufthansa earlier this year to seize control of Niki, with its assets acquired by Laudamotion.
Those assets include 15 Airbus A320 jets, and take-off and landing slots at airports in Vienna, Dusseldorf, Munich, Palma and Zurich.
Lufthansa had ended its interest in buying Niki due to competition concerns flagged by Brussels.
IAG had announced on December 29 that it had agreed to buy Niki for €20m and would provide €16.5m of liquidity. IAG CEO Willie Walsh had described Niki as the "most financially viable part" of Air Berlin, which collapsed after Gulf carrier Etihad pulled financial support for the ailing carrier.
IAG had planned to use Niki, and its 740 staff, as a subsidiary of IAG's Spain-based low-cost carrier Vueling.
Mr Lauda established Niki in 2003. In 2004, Air Berlin took a 24.9pc stake, and acquired it in 2011.
Mr Lauda met Ryanair executives including Mr O'Leary at the airline's Dublin headquarters last month. Asked at the time by the Irish Independent if Ryanair was working on a deal with Mr Lauda in relation to the Niki assets, the airline said it didn't comment on "rumour or speculation".
Ryanair is buying an initial 24.9pc stake in Laudamotion. It will increase that stake to 75pc subject to approval from the European Commission.
Ryanair said that it will pay less than €50m for the 75pc stake, provide the €50m of working capital and lend "management support" to the Austrian airline.
The Irish carrier will also boost Laudamotion's fleet by six aircraft for this summer via a wet-lease arrangement, where Ryanair provides jets and crew.
That will increase Laudamotion's fleet to 21 aircraft. Ryanair aims to increase that to 30 within three years.
Ryanair also expects Laudamotion to be profitable by its third year of operations.
Laudamotion has secured an air operator's certificate (AOC) in Austria.
"The Laudamotion AOC will support a fleet of Airbus aircraft, which is something we have hoped to develop within the Ryanair group for some years," said Mr O'Leary.
Mr Lauda said that with Ryanair's backing, Laudamotion will be "able to establish itself as a strong competitor and to grow quickly and sustainably".