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BA, KLM to submit tie to EU
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July 13, 2000: 7:17 a.m. ET
Airlines to seek EU go-ahead for full merger by first week of August
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LONDON (CNNfn) - KLM Royal Dutch Airlines NV said on Thursday that it and British Airways Plc plan officially to seek European Union regulators' approval for a full merger by the first week of August.
"There's a draft proposal with the European Commission at the moment and the timing is to put down the formal proposal for a full merger at the end of July or at the start of August," KLM told Reuters.
KLM Chief Executive Leo van Wijk warned, however, that a merger could go ahead only if the British and U.S. governments could agree later this year on a liberalized treaty on flights between the two countries. If ownership of KLM was to pass into British hands, Washington could withdraw its right to fly to the U.S.
The Netherlands and the U.S. have an open skies agreement that does not restrict flights between the two nations, but Britain and the U.S. have a restricted pact dating back to 1977, under the terms of which, only two airlines from each nation can fly transatlantic routes to and from Europe's busiest airport Heathrow, west London.
Washington and London have been in talks for some time to open up the market to more competition.
British Airways (BAY), the world's third-largest airline, declined to comment on the reports, reiterating its June 7 announcement that it was in talks with Amsterdam-based KLM, Europe's fourth-largest, that could result in a possible combination of their businesses.
 BA Chairman Lord Marshall told reporters after the company's annual general meeting on Tuesday that the two companies hoped to complete preliminary talks by the end of July. The combination could form Europe's largest and the world's second-largest airline, boasting revenue of about $20 billion and some 600 aircraft.
British Airways is attempting to recover from losses caused by intense competition in Europe and across the Atlantic, and a series of labor disputes. The company's fading fortunes and a sharp drop in the share price culminated in the ousting of chief executive Bob Ayling in March. Former Cathay Pacific boss Rod Eddington took over the post in May.
Shares of British Airways (BAB: Research, Estimates) rose 3 pence, or 0.8 percent, to 385 pence in London Thursday, while shares of KLM (KLM: Research, Estimates) rose 0.2 percent to  28.70. 
--from staff and wire reports
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