Ryanair is buying a majority stake in the Austrian airline founded by Niki Lauda less than two months after the former Formula One champion bought it back.
The Irish carrier is taking an initial 24.9% stake in LaudaMotion and said it will up its holding to 75% "as soon as possible", subject to EU competition approval.
LaudaMotion is the successor to Niki, which Mr Lauda bought back earlier this year after it was put up for sale under the insolvency of previous owner Air Berlin.
Mr Lauda beat rival bidder and British Airways owner International Consolidated Airlines Group (IAG) to snap up Niki when IAG's 36.5 million euro (£32 million) deal fell through after it was ruled that
insolvency proceedings had to switch from Austria to Germany, triggering a fresh round of bids.
Mr Lauda said he was "thrilled" with the Ryanair deal, which would help the airline "establish itself as a strong competitor".
He added: "I have always stood up for competition and have opposed monopolies.
"A new player in the aviation market is born and I am looking forward to offering our passengers an extensive route portfolio at competitive air fares."
Ryanair said it will fork out less than 50 million euros (£43.9 million) on the 75% stake, but will spend 50 million euros (£43.9 million) on start-up and operating costs.
Mr Lauda will chair LaudaMotion's board and oversee the airline's strategy, while Ryanair will provide financial and management support, as well as six aircraft under leases that include crew, maintenance and insurance.
Mr Lauda and Ryanair expect the airline to turn a profit in its third year under plans to have a fleet of at least 30 planes.
Ryanair boss Michael O'Leary said: "With access to the Ryanair fleet and financial resources, LaudaMotion will now grow more rapidly, as it seeks to compete in a market which is dominated by Lufthansa's high air fares with its Swiss and Austrian subsidiaries.
"This LaudaMotion partnership is good news for Austrian and German consumers/visitors who can now look forward to real competition, more choice and lower fares."
LaudaMotion plans to operate scheduled and charter flights from Germany, Austria and Switzerland to largely Mediterranean destinations.
Mr Lauda founded Niki in 2003 and later sold it to Air Berlin in 2011.
The three-times Formula One world champion moved into the airline industry in the 1980s as his career in motor racing came to an end.