Ryanair said it has agreed to pay the sum for a majority 75-percent holding in Vienna-based LaudaMotion from the former Formula One motor racing champion.
The Dublin-based group will also invest another 50 million euros in start-up and operating costs for the first year and hopes to reach profitability within three years.
"Ryanair Holdings Plc today announced that it has entered into a binding agreement with Mr Niki Lauda to support his plan to develop and grow LaudaMotion GmbH," it said in a statement.
"LaudaMotion is an Austrian AOC (air operator's certificate) holder owned by Niki Lauda, which has recently acquired many of the assets, including A320 aircraft, of the former Niki Airline."
The Irish company will initially acquire a 24.9-percent stake and this will climb to 75 percent, subject to EU regulatory approval.
LaudaMotion carrier will meanwhile start a range of scheduled and charter services from Germany, Austria and Switzerland primarily to Mediterranean leisure destinations, it added.
"I am thrilled that in the partnership with Ryanair, LaudaMotion will be able to establish itself as a strong competitor and to grow quickly and sustainably," said chairman Niki Lauda.
"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 chief executive Michael O'Leary added that the move would allow LaudaMotion to "grow more rapidly as it seeks to compete in a market which is dominated by Lufthansa's high airfares 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."
Lauda's business nous and combative nature away from the track saw him establish Lauda Air before selling it to Austrian Airlines in 1996. He then founded Niki, but sold it to Air Berlin in 2011.
The sports personality Lauda returned to the aviation sector in 2016 with the purchase of top-end carrier Amira Air, which he renamed Lauda Motion.
The world-famous driver then won a dramatic takeover race for Niki, the airline he had founded in 2003 before ceding to the now-defunct Air Berlin.