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. Last Updated: 07/27/2016

Aeroflot Says Alitalia Network Is Key

Aeroflot said Friday that it was bidding for Alitalia to get access to European markets and played down the financial difficulties of the struggling Italian carrier.

Aeroflot also said it did not fear potential hurdles to the deal from Italian trade unions, adding that the takeover would allow the company to keep its strong position in its home market.

"We are interested in their network. It will justify our investments over time," Aeroflot spokeswoman Irina Dannenberg said.

Aeroflot joined the race for Alitalia earlier this month when it teamed up with UniCredit following a meeting between President Vladimir Putin and Italian Prime Minister Romano Prodi.

Aeroflot's access to Europe is currently limited by intergovernmental agreements, under which Russia must allow reciprocal access to foreign carriers.

The deal with Alitalia would allow Aeroflot to bypass this rule and protect its domestic market share without having to compete with cheap offers from foreign carriers, experts said.

"The logic is quite clear -- Aeroflot needs to access the European market. There are more passengers there than in Russia and the whole of the CIS," said Oleg Panteleyev, chief analyst at aviation monitoring agency AviaPort. He said Aeroflot's main headache would be Alitalia's trade union: "If it manages to find a compromise with the trade union and keep costs under control, it can pull the firm out of the crisis. But it is a very laborious process."

Dannenberg declined to say how much Aeroflot was prepared to pay for Alitalia. "We have good anti-crisis management experience. We think both we and the Italians will benefit," she said.

If its bid succeeds, Aeroflot will become Russia's second carrier to expand abroad via the acquisition of a loss-making foreign firm, following KrasAir's purchase of Hungary's Malev.

Other contenders for at least 39.9 percent in the Italian carrier include Alitalia's closest local rival Air One and a consortium involving U.S. private equity firm Texas Pacific Group.

Aeroflot, a member of the SkyTeam alliance along with Alitalia, accounts for half of Russia's international flights. It has a market capitalization of more than $3.2 billion, while Alitalia is worth $1.77 billion.