Air France-KLM discussing merger, deny reaching deal

Talks Air France SA, Europe's second-largest airline, and KLM Royal Dutch Airlines NV are proceeding and no agreement has yet been reached on a merger, said Bart Koster, a spokesman for the Dutch airline.

Paris-based Air France and KLM will probably wrap up an agreement by next week, French Transport Minister Dominique Bussereau said in an interview Thursday.

"We're still in talks with Air France about a number of things," Koster said "I'm not going to confirm or deny" a merger will be announced on Tuesday.

"We don't have a deadline," he said.

The world's airlines are facing an estimated US$10 billion in losses this year because of the global travel slump and are seeking partnerships to reduce costs. Air France estimates a link with KLM would save 450 million euros a year by cutting overlapping routes and jointly purchasing aircraft.

Air France is scheduled to hold a meeting with employee representatives Monday at 2pm Paris time to discuss the talks.

"Most of the problems have been resolved now though I don't think they have all been worked out" between Air France and KLM, said Philippe Decrulle, deputy secretary general of the CFDT trade union for Air France. "I think Air France management was just about ready to make an announcement last week when Alitalia jumped in."

Alitalia SpA, Air France's partner airline, has said it's eager to be involved in the Air France-KLM linkup. Alitalia has scheduled a board meeting for 6pm today.

The Italian carrier is part of the SkyTeam airlines alliance led by Air France, and the carriers swapped stakes as part of the accord.