The Mexican Government plans to sell its majority stake in airline company Consorcio Aeromexico SAB to a group of investors that includes Citigroup's local unit Banamex.

Deposit insurance agency IPAB said the group's offer of 2.7159 Mexican pesos a share was the highest when the offer expired at 4pm local time.

A higher counter-offer of MXN2.72 a share from businessmen Alberto Saba Raffoul and Moises Saba Masri arrived slightly later, at 4:02 pm, IPAB said.

Gerardo Rodriguez, public credit director in Mexico's finance ministry, said the Government was pleased with the price it would receive for its 62 per cent stake in the carrier.

"We are very content because it was an extremely transparent process," he said.

The Government's decision to sell Aeromexico to the investor group was final, he said. Banamex group reiterated its plan to inject US$240 million into the airline within 90 days, and said Jose Luis Barraza would be the new chairman of the company.

The investor group's winning bid was nearly 2 1/2 times higher than the Sabas' original offer of MXN1.09 billion, or MXN1.10 a share, made in late August.

Moises Saba conceded defeat in an interview on Mexico's Radio Formula, saying the final bid arrived too late, while criticising the way the Government went about about making its decision.

Saba, who earlier had described the impending finale of the bidding war as "Russian roulette", said he didn't plan to appeal, however. "We don't want to obstruct the process any longer," he said.

IPAB said its considerations in accepting the Banamex group's offer were the urgent need for shareholder investment in the airline, and the opportunity cost of allowing the Banamex group's bid to expire.

Aeromexico reported an operating loss of MXN1.17 billion in the first half of 2007, which it attributed largely to increased competition from low-cost carriers pushing down prices, and higher fuel costs.

"It is a solid company but it's in a very complicated environment. It's going to need a capital increase," Mr Rodriguez said.

A third group that entered the bidding for Aeromexico was rival airline concern Grupo Mexicana, but its offer was blocked by the country's anti-trust commission, which argued that it would threaten competition in the industry. On Oct. 17, Mexicana raised its MXN2.19 a share bid to MXN2.45, and said it was appealing the anti-trust decision.

Majority stakes in the two airlines were among assets acquired by the government in the bank bailout of the 1990s.

The government sold Mexicana in late 2005 to hotel group Grupo Posadas SAB for about US$155 million, but rejected bids for Aeromexico as too low.