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Financial Mirror : BA'S KLMPIRE BUILDING; pounds 13bn Dutch deal is slated.

OPPONENTS are trying to shoot down plans to create Europe's biggest airline before they get off the ground.

British Airways confirmed yesterday that it is in merger talks with Dutch rival KLM.

A tie-up would create a new super-power in the sky with annual sales of pounds 13 billion.

A combined fleet of more than 528 planes would carry 56 million passengers a year.

Only the two US giants United Airlines and American Airlines could claim to be bigger.

But the move was immediately condemned by rivals and consumer groups.

BA's arch-rival Sir Richard Branson branded it "a merger too far".

The bearded boss of Virgin Atlantic said: "Between them they would completely dominate short-haul services in Europe and North Atlantic routes.

"That cannot be in the interest of fare-paying passengers. We would hope that the competition authorities would stop it happening."

EasyJet's outspoken boss Stelios Haji-Ioannou also objected strenuously. He said the deal should be blocked unless BA and KLM were forced to hand over precious take-off and landing slots at Heathrow and Amsterdam's Schipol Airport.

He claimed a combined BA KLM would totally dominate some routes. "They would have 72 per cent of all London to Amsterdam flights," he said.

"This kind of stranglehold cannot be good for consumers."

Passenger watchdogs immediately expressed alarm that less competition would lead to higher fares.

The European Commission immediately made it clear it would scrutinise any proposed deal.

The brief 10-line statement from BA stressed the talks were in their infancy and there could be no guarantee of a deal.

It also said neither company would make any further comment. But the talks which come shortly after BA plunged to a pounds 244 million loss, its first since privatisation. And they are the first strategic move by BA's new boss Rod Eddington since he replaced Bob Ayling as chief executive in May.

City experts said it was easy to see the logic in a link-up.

"Firstly, there will be plenty of scope to cut costs by removing duplication," said one senior transport analyst.

"The bigger fleet of planes will give them greater flexibility.

"Schiphol could be used to ease some of the congestion at Heathrow.

"Finally, they could combine their no-frills services - Go and Buzz - which both fly out of Stansted."

News of the possible deal helped KLM's shares take off but BA's dropped.
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Title Annotation:Business
Publication:The Mirror (London, England)
Date:Jun 8, 2000
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