Aeroflot seeks up to $1.2 billion to fund Alitalia acquisition: report

18 May 2007

Mumbai: Russian airline Aeroflot is seeking up to $1.2 billion in loans from western banks to fund its purchase of 39.9 per cent of Italy''s Alitalia, the Vedomosti newspaper said.

Aeroflot had sent letters to 20 foreign banks, including Deutsche Bank, Citigroup, Commerzbank, ABN AMRO, Credit Suisse, BNP Paribas, Calyon, Royal Bank of Scotland and Unicredit, Aeroflot''s bidding partner, the report quoted Mikhail Poluboyarinov, finance director at the Russian flag carrier, as saying.

The newspaper quoted a source involved in the talks with banks as saying that it hoped to borrow 500-900 million euros ($676 million-$1.2 billion).

Poluboyarinov declined to reveal the exact amount it sought to borrow from banks but said it would be an unsecured, one-year loan and the airline expected to hear from the banks by the end of May.

A US private equity consortium led by Texas Pacific Group and smaller Italian carrier Air One is also bidding for Alitalia.

Alitalia union is backing a local group, or at least a European one, to take over the airline. The successful bidder for Alitalia should concentrate on expanding the flagship carrier, not on cutting jobs, Raffaele Bonanni, leader of Italy''s second largest trade union confederation said in an interview.