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Aeroflot pulls out of Alitalia bid - news release -1

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(Adds reasons in paras 3, 4, background in paras 5, 6)

MOSCOW, June 27 (RIA Novosti) - Aeroflot [RTS: AFLT] has pulled out of the bid for a controlling stake in Italy's ailing state-controlled Alitalia Airlines, Russia's flagship air carrier said in a news release Wednesday.

"After considering all the circumstances linked to Alitalia's privatization, Aeroflot has decided to quit all bidding procedures and withdraw its bid for shares in this company," the news release said.

Aeroflot said its consultants "had not been given access to full information about the commercial and operational status of Alitalia, which could have helped formulate a well-grounded business proposal to restructure the airline" as part of the bid.

The other reason, Aeroflot said, is the terms of Alitalia's privatization, which would seriously restrict Aeroflot's options for improving the Italian air carrier.

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-euro loss in 1996-2006, including 380 million euros in 2006. Last fall, the Italian government decided to privatize the airline.

Other bidders for the struggling airline include Italy's UniCredit Bank and AP Holding in conjunction with Intesa Sanpaolo controlled by Italy's AirOne owner Carlo Toto, and MatlinPatterson Global Advisors LLC who rejoined the tender last week.

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