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Alitalia says Aeroflot's bid for controlling stake still on

Italy's ailing air carrier Alitalia has denied that Russia's flagship airline Aeroflot pulled out of its bid for a controlling stake in the company. 

„Aeroflot has not withdrawn from the tender,” Alitalia press secretary Federica Mancinella said. „We know that Aeroflot has denied the reports that it is has pulled out.” Aeroflot spokesperson Irina Dannenber earlier dismissed the reports, saying the matter would be addressed at an upcoming meeting of the company's board of directors. She did not specify when the meeting would take place.

Alitalia, established in 1947, has been fighting a losing battle against low-cost competition and rising fuel prices. The company posted a €3.2 billion ($4.29 billion) loss in 1996-2006, including €380 million in 2006. Last fall, the Italian government decided to privatize the airline.

Italy's Finance Ministry said in May it may sell more than the originally-planned 39.9% stake in Alitalia, possibly offering the entire 49.9% government-owned block, at the buyer's request. The ministry said in an open letter to the bidders, including Aeroflot, that they should submit final plans for the company's restructuring by July 2. Under the terms of the bidding, they must guarantee that Alitalia will retain Italian identity for at least eight years.

In addition to a consortium of Aeroflot and UniCredit Bank, there are two other groups of bidding companies - AP Holding in conjunction with Intesa Sanpaolo (controlled by Italy's AirOne owner Carlo Toto) and an international group comprised of US asset management group MatlinPatterson, US private-equity Texas Pacific Group Europe and Italian bank Mediobanca. (