Alitalia's sale faces the risk of being grounded

19 July 2007

Italian airline Air One has withdrawn from the bidding for a substantial stake in state-owned rival Alitalia.

It said it took the decision because Alitalia's "sustainable growth" would be compromised by the sale conditions.

The group led by Air One was the last serious contender for the stake in loss-making Alitalia after Russian airline Aeroflot pulled out last month.

Its withdrawal threatens to derail the Italian government's plans to privatise the national carrier.

Interested parties have until 23 July to make legally binding offers for the government's stake - up to a maximum of 49.9% - it plans to sell.

The deadline has been extended twice and the bidding process has been further confused by uncertainty over Alitalia's true financial situation.