Austrian Airlines said on Tuesday it had called in its lawyers over a troubled plan for investor Sheikh Mohamed Bin Issa al Jaber to take a 20 percent stake.
The airline had extended to May 21 a deadline that expired on Monday for the sheikh to provide a bank guarantee for his plan.
In a deal announced in March, the Saudi-Austrian investor was to take a 20 percent stake in the airline via a capital increase at 7.10 euros for about EUR150 million euros (USD$232 million).
The airline wanted the funds to help it expand in the Middle East and elsewhere.
Chief Executive Alfred Oetsch, asked in a radio interview on Tuesday what happens to the contract now, said: "We will hand the subject over to our lawyers. I cannot say now whether we are demanding that the contract be fulfilled or (seeking) damages."
On the extension of the deadline, he said: "It was only fair to give him a chance to fulfill the contract."
The airline and its main stakeholder, state holding company OeIAG, said the contract with al Jaber was watertight and binding.
OeIAG, in a statement, for the first time gave details of al Jaber's additional demands.
It said he wanted further shares for up to EUR50 million at about 4 euros each, and greater influence on the management board, the supervisory board and the steering committee.
A spokesman at al Jaber's office in Vienna was not available.
OeIAG said: "In order to ensure control of Austrian Airlines by OeIAG and its syndicate partners, and the economic interests of society and the Austrian republic, it was inconceivable to meet the additional demands of Sheikh al Jaber."
Tuesday's statement from the airline extending the bank guarantee deadline said al Jaber claimed to have been deliberately misled. It rejected the allegations.
Al Jaber threatened to pull out after the airline posted a first-quarter EBIT loss of EUR50.1 million in April, much worse than expected, sending the shares sliding. The airline says this is typically the worst quarter in the sector.
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