MILAN Italian airline Alitalia, still reeling from financial troubles in 2008, denied media speculation about a possible tie-up with state railway operator Ferrovie dello Stato.
"Since rumours continue to appear on the front pages of newspapers, we are forced to utterly and strongly deny any idea of an agreement between Alitalia and Ferrovie dello Stato," Alitalia said in a statement. "No such plan is being considered."
On Sunday Italian newspaper Corriere della Sera reported that Ferrovie dello Stato was considering investing in Alitalia as part of an eventual turnaround plan that would involve an industrial partnership with Franco-Dutch airline Air France-KLM (AIRF.PA).
Alitalia returned to profit in the third quarter after reporting losses in the first half, but it is losing ground to high-speed railway operators such as Ferrovie dello Stato and private newcomer Nuovo Trasporto Viaggiatori (NTV.L).
Alitalia is owned by CAI, a consortium of investors that bought the then-bankrupt airline in 2008. CAI is partly owned by Air France-KLM. Alitalia's shareholders can exercise options to trade their shares when a lock-up period ends in January.
In May, Air France said it would probably wait until at least 2014 before using its option to take control of Alitalia, in which it has held 25 percent since January 2009.
Alitalia booked net profit of 27 million euros in the third quarter, down from 70 million euros a year before. A protracted recession in Italy is also hurting demand.
Net debt rose to 923 million euros at the end of September, up by 61 million euros from the end of June. (Reporting by Antonella Ciancio; Editing by Helen Massy-Beresford)