Lufthansa steps out of the race for Alitalia

Cologne, Germany: Europe's largest airline, Lufthansa, has said that it will not enter the bidding contest for Italian carrier Alitalia, despite Italy's decision to give potential investors more time to bid. The German airline's chief executive, Wolfgang Mayrhuber, said that the asking price for the airline was too high.

Mayrhuber said that there were a number of reasons why the German airline would remain "very cautious" in its acquisition strategy. "Alitalia is a good brand," he said, but not only was the price too high, the strong influence of labour unions on the ailing airline was also a deterrent factor.

"The unions are not in a position to give answers that would give investors confidence," he said.

He also thought Alitalia's fleet would have to be reorganised.

Italy extended the time for bidders for Alitalia to submit binding offers after one candidate said it was open to considering new partners, and also as US private equity fund, Matlin Patterson, re-entered the fray.

The Alitalia sale received another jolt with the deputy chief executive of one of the final bidders, Aeroflot, informing Russian news agency Interfax that his airline considered teaming up with fellow bidder Air One, but had decided the move would be "inexpedient".

Aeroflot was earlier short listed in a consortium with Unicredito Italiano SpA to bid for 39.9 per cent of the stake put up for sale by the Italian government.

The Italian Treasury has pushed back the deadline for final bids to July 12 from July 2.