Key issues to resolve before Air France and KLM alliance

Air France and KLM have quashed hopes of an immediate cooperation deal, citing key issues that have to be resolved before the Dutch carrier can be included in the SkyTeam alliance.

The Dutch airline is currently allied with Northwest Airlines, and Air France has links with US carrier Delta Air Lines and Italy's Alitalia in the SkyTeam groupings.

Much market speculation last week supposed the two were on the verge of deals which may have opened the door to an eventual merger of Europe's second and fourth biggest carriers.

A joint statement issued by the airlines earlier confirmed the discussions but has suggested several issues still had to be worked out.

"These negotiations are in an advanced stage; however, critical points are still under discussion between the parties and further communication will follow as soon as an agreement is expected to be reached." it said.

Planned board meetings for today have been delayed, and a spokesperson for Air France said that management would brief its works council but did not expect any major news as a result of that meeting.

KLM has previously made several unsuccessful attempts to merge with British Airways.