LONDON (CNNfn) - British Airways PLC has opened discussions with Northwest Airlines Corp. as part of its merger talks with KLM Royal Dutch Airlines, media reports said Monday, raising the possibility that the U.K. company might ditch its current partnership with AMR Corp.'s American Airlines. |
BA, Europe's biggest airline, began talks in June about a possible merger with rival KLM, but progress has been slow, owing to a complicated regulatory environment on both sides of the Atlantic and the two companies' entanglements with different U.S. allies. BA has a partnership with American Airlines and other carriers via the Oneworld alliance.
"It's too early to say what could emerge, but we are in talks and looking at all aspects with regard to a possible merger with KLM," Sarah James, a spokeswoman for British Airways, told CNNfn.com. "The situation is complicated with regulatory concerns from the European Union and U.S."
British Airways has examined the option of forming a full alliance with Northwest (NWAC: Research, Estimates) that could spell the end of its alliance with American Airlines, the Wall Street Journal and the Financial Times said. AMR (AMR: Research, Estimates) is aware that British Airways will need to talk to Northwest as part of merger talks with KLM, BA said.
British Airways and American Airlines have failed to win European and U.S. regulators' consent for a full merger because they refuse to give up highly prized takeoff and landing slots at London's Heathrow airport, a key hub for flights between Europe and North America.
KLM Chief Executive Leo van Wijk has made it clear that any merger with British Airways must not compromise its alliance with Northwest.
The board of British Airways (BAY: Research, Estimates) meets later Monday to press BA Chief Executive Rod Eddington to conclude discussions with KLM (KLM: Research, Estimates) in the coming weeks, according to the FT. BA declined to discuss the content of the meeting.
The combination of BA and KLM would form Europe's largest and the world's second-largest airline, boasting annual revenue of about $20 billion and a fleet of some 600 aircraft
American Airlines, for its part, has strayed from its Oneworld alliance in the past few weeks by establishing joint flights with SAirGroup, the parent of Swissair and leader of the Qualiflyer airline alliance.
Shares of British Airways slipped 1.4 percent to 307 pence ($4.33) in London, while KLM rose 0.3 percent to 28.80 ($24.68) in Amsterdam.