BA 'renews merger talks with KLM'

British Airways has renewed merger talks with Dutch company KLM, it has been reported.

The move would create the world's third largest airline,

BA's chief executive Rod Eddington is thought to have contacted his opposite number at KLM to resurrect the £5bn merger discussions which broke down last September.

A deal with KLM would give the group a second major travel hub in Europe at Amsterdam's Schiphol airport to add to BA's strong position at London's Heathrow.

It would create Europe's largest airline.

BA has sought to play down the speculation.

A spokeswoman said: "BA talks to a large number of airlines. When it has something to say it will put a statement out."

Mr Eddington is also heading to the US to hold talks with new transport secretary Norman Mineta and American Airlines chief executive Don Carty.

The spokeswoman says BA is keen to continue to deepen its ties with American Airlines with a view to establishing an alliance.