Russian airline Aeroflot will announce within days that it is pulling out of the bidding for Italian airline Alitalia, Interfax news agency cited an unnamed board member as saying on Saturday.
"The decision in principle has already been taken. The chief executive of Aeroflot will inform Italy's Finance Ministry about the Russian carrier's withdrawal from the acquisition of the state-held shares in Alitalia," the source said.
Aeroflot has already denied one report by Interfax that it had pulled out of the bidding for the Italian government's 49.9 per cent stake but its lukewarm enthusiasm has added to investors' fears that the sale could collapse.
Aeroflot, which is backed by Italian bank UniCredit, has expressed concern about the price tag and about Alitalia's finances, while a 30 per cent shareholder in the Russian firm has said he is "negative" about the deal.
But on Thursday, the Italian government gave bidders more time to submit binding offers after one candidate said it was open to new partners and US private equity fund MatlinPatterson re-entered the fray.
Aeroflot's spokeswoman was not available to comment on the Interfax report on Saturday.