British Air, KLM Disavow Rumors
KLM Royal Dutch Airlines and British Airways said Sunday their chief executives had met for “general” talks but moved to scotch speculation that merger negotiations abandoned last year had resumed.
Both companies denied a report in the Sunday Times newspaper that they had started fresh talks on a $6.9-billion merger to create the world’s third-largest airline.
“We’re in general orientating discussions, nothing else. . . . No negotiations are going on, no merger talks,” KLM spokesman Hugo Baas told Reuters.
Baas confirmed that BA Chief Executive Rod Eddington had met his KLM counterpart, Leo van Wijk, but said Van Wijk had told him the talks were not specifically about a merger. They dealt with general matters such as the role of airlines in Europe and the single market, Baas said.
BA and KLM abandoned nearly four months of merger talks last September after the Dutch airline balked at losing its national identity to Europe’s biggest carrier.
A BA spokeswoman confirmed the chief executives had met but denied they discussed a merger.
“We’re interested in European consolidation, but it’s at least three to five years away,” she said.
The Sunday Times reported earlier that the two airlines now believed they could rapidly agree on the financial details of a merger, adding that the BA board discussed a deal at a meeting last Friday.
“We are in a preliminary discussion phase,” the newspaper quoted a senior company source as saying. “We still want to do the deal. . . . They are the logical partners for us whenever consolidation is permitted within Europe.”
The main reason for the failure of the previous talks was rooted in a byzantine set of international treaties drawn up half a century ago to govern flying rights across borders.
BA and American Airlines are preparing for talks with U.S. Transportation Secretary Norman Y. Mineta in an attempt to gain support for a stronger alliance between the two carriers.
Rules governing international aviation that date back to 1944 dictate that the right to fly across borders must be agreed upon in bilateral treaties between home states.
So if BA bought KLM, the Dutch airline would not be able to fly to other countries as the flag carrier of the Netherlands.
The Sunday Times quoted a BA source as saying: “We are trying to persuade our governments to work with us on this and the need to change the bilateral agreements between European countries and America.”
The newspaper said BA had already had contact with EU Transport Commissioner Loyola de Palacio.
