BA has 'no plans' for KLM merger

British Airways confirmed today that it had left the way open for a potential link with Dutch airline KLM, but ruled out a full-blown merger.

BA said it would still consider an alliance with KLM, such as joint membership of Oneworld, in which BA is a leading member.

But the UK flag carrier, which ended merger talks with KLM three years ago, said revival of discussions about a deeper tie-up was “not on the agenda”.

A BA spokesman said the airline was currently not involved in any talks with KLM about an alliance. But he added: “The door is not closed from our point of view.”

BA made its comments following a report in French financial newspaper L’Agefi that European air giants Air France and KLM will officially announce a long-discussed merger next Thursday.

The boards of both airlines are scheduled to meet on September 17 to approve the operation, L’Agefi said.

Air France would buy 100% of the Dutch owned KLM, while KLM shareholders will receive 15% of the French government-owned stake in Air France, the newspaper reported.

A spokesman for KLM confirmed today that the two companies were near an agreement. Air France refused to comment.

A KLM spokesman said BA, with whom KLM broke off talks about an alliance last month, had left the door open for a possible resumption of negotiations, should talks break down with Air France.

BA and KLM abandoned negotiations about a full-blown merger three years ago after deciding they would be unable to overcome regulatory hurdles.

The British airline has since taken a 9% stake in Spanish flag carrier Iberia.

An analyst at UBS Warburg said the main reason BA was interested in KLM at that time was due to its need for another European base in which to expand.

It is now focusing on cost reduction and is more likely to be interested in expansion of existing capacity in London, such as a third runway at Heathrow, the analyst said.

Another analyst, at Williams de Broe, added: “I would be very surprised if BA did a tie-up with KLM”.