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Change Your Life! |
British Airways confirms that merger talks with KLM |
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News |
June 8, 2000
LONDON, JUNE 7 (AP) - British Airways PLC confirmed Wednesday that it has entered talks with KLM Royal Dutch Airlines NV about a possible merger.
If successful, a combination would create the world's third-largest airline, behind United Airlines and American Airlines.
The merged airline would be valued at more than 5 billion pounds (dlrs 7.5 billion) with a fleet of more than 500 aircraft.
British Airways said in a statement that it would be making no further comment "until there is anything material to say." It cautioned the talks were at a preliminary stage and might not "result in any transaction between the parties."
In Amsterdam, KLM spokeswoman Sandra Maas said the talks could lead to a full-fledged merger, a takeover, an alliance or cooperation in specific operations.
Advantages of a possible deal include greater efficiency and savings and a wider choice of passenger destinations. Maas said the two airlines also could integrate operations at their respective hubs - London's Heathrow and Amsterdam's Schiphol airports.
A deal could, however, face significant regulatory hurdles in Europe and the United States.
EasyJet, a low-cost airline based in Luton, England, claimed that a BA-KLM merger would control 72 percent of all flights between London and Amsterdam. It called for the European Commission, the European Union's executive arm, to investigate any planned deal before it occurs.
Speculation about a deal between British Airways and KLM began after KLM called off a joint venture with Alitalia SpA in late April. On Monday, KLM confirmed it wanted to find a new partner within a year.
British Airways and KLM last attempted to merge in 1992, but the deal broke down over how to value the two airlines.
Analysts had been expecting pairings in the airline industry to intensify after the recent announcement that UAL Corp., the parent of United Airlines, has agreed to acquire US Airways for dlrs 4.3 billion.
Shares in British Airways were down 3 percent in midday trading at 374.25 pence (dlrs 5.73) each. KLM shares were up 6.5 percent at 29.55 euros (dlrs 28.23) each in Amsterdam.
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