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British Air, KLM in talks?
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June 5, 2000: 1:03 a.m. ET
Reports: European carriers to continue airline consolidation trend
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LONDON (CNNfn) - British Airways and KLM Royal Dutch Airlines are set to be the next airlines to join forces, according to published reports Monday.
Rumors of a deal have been around for some time, and renewed speculation followed a report late last week that the European firms' American partners were also discussing an accord.
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CNNfn's Hala Gorani reports on the latest rumor in the airline industry.
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AMR Corp. (AMR: Research, Estimates), parent of No. 2 U.S. carrier American Airlines, was reported to be in merger discussions with Northwest Airlines (NWAC: Research, Estimates), America's fourth-biggest airline. AMR and BA have been attempting to formalize their tie-up for three years, in the face of stern regulatory opposition, while KLM and Northwest have long been partners.
BA has reportedly revived its bid for KLM after a merger between the Dutch carrier and Italy's Alitalia collapsed earlier this year. Previous BA merger negotiations with KLM collapsed in 1992.
A combined BA and KLM would create a powerful grouping with a tight hold on North Atlantic routes.
With KLM's market capitalization at about  1.2 billion ($1.13 billion), industry analysts say such a merger would be possible, but would face a large obstacle in the shape of international treaties governing air traffic. Previous reports have indicated BA would account for some 85 percent of the enlarged entity.
BA is suffering a hefty bout of turbulence, recently reporting its first annual loss since privatisation in 1987 after jettisoning chief executive Bob Ayling in March. 
KLM stock rose 2.4 percent to 25.55 in Amsterdam Monday morning, but BA shares slid 2 percent to 389 pence in London. 
- from staff and wire reports
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