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Sunday, 10 June, 2001, 16:18 GMT 17:18 UK
KLM and BA deny new merger talks
BA aircraft
Merger would create the world's third-biggest airline
British Airways and Dutch airline KLM have denied media reports that they are again in merger talks to create the world's third largest airline.

KLM on Sunday said that they were just general discussions and denied claims in a Sunday Times article that merger talks had taken place.

A BA spokeswoman told BBC News Online that "there is nothing in this", that there were "no merger plans".

"We're in general orientating discussions, nothing else... No negotiations are going on, no merger talks," Reuters quoted a KLM spokesman on Sunday.

But BA chief executive Rod Eddington and KLM president Leo van Wijk had met recently, the spokesman confirmed.

The companies ended four months of merger negotiations without agreement last September, saying they had been unable to resolve a number of issues.

Just talking

The two executives had not specifically talked about a merger, but dealt with general matters such as the role of airlines in Europe and the single market, the KLM spokesman said.

The BA spokeswoman confirmed the airline executives had meet but stressed that these meetings occur regularly at industry conventions and other events.

But the Sunday Times claims the BA board discussed a deal at a meeting on Friday and that the two airlines believe they can rapidly agree the financial details of a merger.

KLM said last month it had not held talks with other airlines recently about potential alliances and had no immediate plans to do so.

Past talks

The airlines announced last June that they were discussing a 5bn merger, but talks are thought to have halted over difficulties involving competition concerns and strict regulations over transatlantic flights.

They filed a draft merger proposal with the European Commission's competition authorities after entering into an exclusive negotiation agreement.

But problems in securing approval from the competition authorities, as well as the Dutch airline's fears that it would lose its national identity to the much bigger carrier, appeared to cause the talks to break down.

Complementary businesses

Had it gone ahead, the merger would have created the world's third-largest carrier, after United Airlines and American Airlines.

BA is fourth biggest in terms of passenger traffic, while KLM ranks twelfth.

Analysts had regarded the two airlines' businesses as complementary: BA has concentrated on high-paying passengers, while KLM has focused on transfer traffic from Europe.

The deal would have been an attractive option for BA, which has seen its profits slump with increased competition on transatlantic routes, from budget airlines and high fuel prices.

It would also have given BA access to KLM's strategic Amsterdam hub, which has more spare capacity than London's Heathrow.

BA and KLM had discussed a merger several years ago, but the deal collapsed when KLM demanded a near-equal partnership.

A possible deal between KLM and Alitalia also came to nothing.

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See also:

22 May 01 | Business
British Airways profits fly
21 Sep 00 | Business
Airlines end merger plans
13 Jul 00 | Business
Airlines aim for merger
13 Jun 00 | Business
Pessimism on 'open skies' talks
08 Jun 00 | Business
BA-KLM talks deepen
07 Jun 00 | Business
British Airways confirms KLM talks
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