UPDATE 6-Mexicana airline joins race to buy Aeromexico

(Adds Aeromexico reaction)

By Veronica Gomez Sparrowe

MEXICO CITY Oct 3 (Reuters) - Mexican airline Mexicana said on Wednesday it offered to buy rival Aeromexico for $200 million, the highest amount so far for the struggling carrier in a bidding war that has attracted three groups.

Aeromexico shares AMEXICOA.MX jumped over 10 percent after the news and held much of those gains, closing up 15 centavos, or 7.54 percent, at 2.14 pesos, lower than Mexicana's offer as the bid is likely to come under anti-trust scrutiny.

Eduardo Perez Motta, head of Mexico's anti-monopoly commission, the CFC, warned that the offer may not be allowed.

"Who knows if we are going to approve it," he said. "For the moment, the figures do not give much hope that this will happen."

Mexicana is offering 2.19 pesos per Aeromexico share, topping last week's sweetened $160 million bid from the Saba family, one of the country's wealthiest, with interests in real estate, textiles and pharmaceuticals.

The offer will stand for 20 days once approved by Mexico's banking and securities commission. The bid also needs to be cleared by the country's anti-monopoly agency.

"Merging the two companies into one single airline group will allow them to become profitable," Mexicana's Chairman Gaston Azcarraga told a news conference.

A third group, including the Mexican unit of Citigroup Inc (C.N) and major shareholders of brewing giant Modelo (GMODELOC.MX), sweetened its own bid on Wednesday to 1.7569 pesos per share, exactly the same as the Saba offer, although lower than the Mexicana bid.

Aeromexico said in a statement that the two offers of 1.7569 pesos per share were "reasonable from a financial point of view." The company did not refer to the Mexicana bid.

The third group also vowed to strengthen Aeromexico's finances with an injection of $240 million as part of its offer for the airline.

The Mexican government is trying to sell its 62 percent stake in Aeromexico and its holding company, Consorcio Aeromexico. The government has not said when it will make a decision.

Aeromexico and Mexicana were brought under government control after they went bankrupt in the mid-1990s. In the re-privatization process, Mexico's anti-monopoly agency forced them to be sold separately.

Hoteliers Grupo Posadas (POSADASL.MX) bought Mexicana in 2005 for just over $150 million.

High labor costs and loss of market share to smaller, discount rivals have dogged Aeromexico in recent years and the airline has been making heavy losses.

According to Azcarraga, Mexicana and Aeromexico's combined domestic market share dropped to 53 percent as of the end of June, compared with a 63 percent share in the same period of 2006.

"The conditions (of the airline industry in Mexico) have changed dramatically ... we are convinced that the future is a strong group with economies of scale that allow it to compete against low-cost carriers," Azcarraga said. (Editing by Frank Jack Daniel/Tim Dobbyn/Andre Grenon/Carol Bishopric/Gary Hill)