Mexicana to fight Aeromexico takeover ban

MEXICO CITY, Oct 12 (Reuters) - Airline Mexicana plans to go to court to challenge a ruling by Mexico's competition watchdog that bans its $200 million takeover bid for rival Aeromexico.

Mexicana, insisting that its bid was the highest of three offers for the loss-making Aeromexico and also had the best business plan, said on Friday it would use all legal means to acquire Aeromexico AMEXICOA.MX.

Mexicana wants to merge with Aeromexico to form a single, more profitable carrier to compete with several upstart low-cost airliners operating in Mexico.

The country's competition watchdog banned Mexicana's bid for Aeromexico on Thursday on the grounds it would create a situation where one airline would be in position to eliminate competition and dictate fares to consumers.

A combined Mexicana and Aeromexico would dominate several key routes in Mexico, according to data from the watchdog.

Vying with Mexicana for Aeromexico, which has more than $1 billion in debt and is hamstrung by high labor costs and competition from discount carriers, are two other bidders.

The Saba family, one of the wealthiest in Mexico, has put in the second-highest offer, at $166 million. Another group, including Citigroup Inc (C.N) and major shareholders of brewing giant Modelo (GMODELOC.MX), is offering $160 million.

The Mexican government is trying to sell its 62 percent stake in Aeromexico and its holding company, Consorcio Aeromexico.