BRITISH AIRWAYS AND KLM CONFIRM MERGER TALKS

BRITISH AIRWAYS AND KLM CONFIRM MERGER TALKS

   British Airways and KLM Royal Dutch Airlines said that they are discussing a potential merger, confirming days of market speculation.

   The two major European airlines said that that they have agreed to conduct talks “on a possible combination of their businesses.”

   They added that the talks are at a preliminary stage, and that they would make no further public comment on the matter until there was “anything material” to say.

   BA has financial stakes in Australian airline Qantas (25 percent) and in Spain’s Iberia (9 per cent owned). BA is a member of the oneworld alliance.

   KLM owns 80 percent of Transavia Airlines, 50 percent of Martinair Holland and 26 percent of Kenya Airways. The Dutch airline is in an alliance with Northwest Airlines.

   If confirmed, a merger or takeover would be the first cross-border merger between major airlines in the industry, a development that could create uncertainties about the application of country-based bilateral air agreements.

   The BA/KLM merger talks are the latest in a series of consolidation moves in the airline industry and follow United Airlines’ recent offer to acquire U.S. Airways and American Airlines’ reported interest in buying Northwest Airlines.