|
KLM soars on BA hopes
|
 |
January 28, 2002: 11:52 a.m. ET
Shares in Dutch carrier rise on speculation it may seek tie-up with BA
|
LONDON (CNN) - KLM shares soared on Monday on hopes it will seek closer ties with British Airways after a BA-American Airlines alliance deal fell apart.
But the Dutch airline, Europe's fourth largest, said it had no immediate plans to expand co-operation with BA (BAY), the No.1 carrier in Europe.
"We take note of the statements from BA and American Airlines and we will be looking into what this will mean, but for the time being we are focusing on short-term technical cooperation with British Airways," KLM spokesman Bart Koster told Reuters. "There is nothing new."
The BA-American alliance deal collapsed on Friday when the companies rejected U.S. demands that they give up 224 weekly slots at London's Heathrow airport, the world's busiest international airport, to be granted antitrust immunity.
KLM and BA have made several failed merger attempts in recent years, the latest coming in September 2000.
Last week, the two airlines unveiled a short-term cooperation deal on Middle East routes in an effort to cut costs due to a drop in global demand after the September 11 attacks.
The economic slowdown has also forced major carriers, like KLM and BA, to cut staff and reduce services.
A tie-up with KLM would give BA links with the No. 4 U.S. carrier Northwest Airlines -- with which KLM has had a transatlantic alliance since 1989 -- and fifth-biggest U.S. carrier Continental Airlines, which last October agreed a code-sharing deal with KLM to boost traffic for both.
"The problem with American means BA has to rethink all its options and one of its options is now something with KLM," Nick van den Brul, equity research analyst at BNP Paribas, told Reuters.
"There's no question that there is a potential deal there."
KLM shares were up 8.3 per cent in late trading in Amsterdam. Shares in BA fell 3.3 percent in London.
Meanwhile, with a key transatlantic strategy collapsed, BA has just over two weeks to regroup before it confronts major investors with a plan to restructure the loss-making airline.
Fund managers and analysts said they expected details from BA on its long awaited "size and shape" review at its investor conference on February 13.
"In our view, this is likely to involve further retrenchment and rationalisation of the business, with profit recovery a long way off," said BNP Paribas in a research note, downgrading its recommendation on the stock to "underperform" from "neutral."
-- Reuters contributed to this report 
|
|
|
|
|
|
|
