TPG working on Alitalia bid despite Iberia

(Adds background, share price)

MILAN, March 30 (Reuters) - U.S. private equity firm Texas Pacific Group [TPG.UL] is still working on a bid for Alitalia AZPIa.MI after its bid approach for Spanish airline Iberia (IBLA.MC), a source close to Texas Pacific Group said on Friday.

"We're continuing to work on presenting an offer for Alitalia," the source, who asked to remain anonymous, told Reuters.

Italy is selling the flag carrier, which is losing more than a million euros a day. Texas Pacific Group is among five bidders short-listed for the privatisation.

Iberia said on Friday it had received a bid approach from Texas Pacific Group that valued the Spanish airline at about 3.4 billion euros ($4.54 billion).

Shares in Alitalia were up 1.13 percent at 0.947 euro at 0804 GMT as Milan's blue-chip S&P/Mib index .SPMIB was off 0.13 percent.

((Reporting by Sabina Suzzi, writing by Ian Simpson, tel Milan newsroom, 39 02 6612 9666, fax 39 02 801 149, milan.newsroom@reuters.com))

($1=.7495 Euro)

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