Russia's Aeroflot has made a surprise entry into the bidding for its SkyTeam partner Alitalia, lining itself up behind the bid from Italian bank Unicredit.

Unicredit/Aeroflot is one of three bidders remaining on the table. US-based private equity firms MatlinPatterson and Texas Pacific have teamed up with Italian investment bank Mediobanca while Air One head Carlo Toto's AP Holding is also still in the running.

The Italian government shortlisted five bidders in February. Management & Capitali has pulled out while MatlinPatterson and Texas Pacific were originally shortlisted as two separate bidders.

Italian transport minister Alessandro Bianchi said in April that a successful bidder will need to spend €3 billion ($4 billion), including €1.5 billion to buy Alitalia and another €1.5 billion to turn it around.

The entry of Aeroflot into the bidding has raised a few eyebrows. However, Oleg Sudakov, a Moscow-based financial analyst at Rye, Man & Gor Securities, says the Russian carrier is in a relatively healthy financial position with net debt of around $300 million. "In my view, Aeroflot can easily borrow $700 million to $800 million without threatening its financial position," he says, noting that the carrier will also benefit from around $150 million of royalties from foreign carriers for trans-Siberian flights until 2013.

He says Aeroflot has experience of dealing with troubled airlines, including Arkhangelsk Airlines, now a fully owned subsidiary known as Aeroflot-Nord. Aeroflot also has solid backing from the Russian government, which has a 51% majority shareholding, and state-owned Russian banks, Sudakov says.

Aeroflot's SkyTeam partner Air France says it is looking to join the Aeroflot/Unicredit bid, while Lufthansa says it is not interested in joining any bid.

Air One chairman Carlo Toto promises to not resell Alitalia if his bid succeeds. He wants the airline to become the fourth-largest European carrier.

"Aeroflot can easily borrow $700 million to $800 million without threatening its financial position", Oleg Sudakov, financial analyst Rye, Man & Gor Securities

Source: Flight International