KLM Royal Dutch airlines is in talks with various partners to expand its low-cost airline Buzz.

Buzz is currently the third-largest no-frills airline in Europe, after Britain's Easyjet and Ryanair from Ireland.

"Buzz has a fleet of 12 planes, but we want to extend that to 30-40 planes by 2006," a KLM spokesman said.

He added KLM was looking for external partners to spread the financial risk.

KLM is interested in expanding Buzz because low-cost airlines actually make money KLM spokesman

"Planes cost money and we rather buy them with a partner than on our own."

Low-cost airlines such as Easyjet and Ryanair enjoy growing demand within Europe, whereas traditional carriers such as KLM and British Airways have suffered from the global economic slowdown and the aviation downturn prompted by the September 11 attacks.

Easyjet, which last year bought out budget carrier Go, told BBC News Online it had no plans to take part in a Buzz deal.

Growth market

KLM said last year it wanted to expand its low-cost business, with analysts predicting the market for cheap no-frills budget flights is set to grow at an annual rate of 20% between 2002 and 2005.

"In five years time, one-quarter of all air passengers in Europe will fly with a low-cost airline," trhe KLM spokesman said.

"That number is now one in almost ten, so there is a lot of potential for growth.

"More importantly, KLM is interested in expanding Buzz because low-cost airlines actually make money."

He added that Buzz was expected to wrap up talks with prospective partners in the first half of this year.

Set up in 1999 from London Stansted airport, Buzz now flies to 24 destinations in Germany, France, Britain and The Netherlands.

KLM will release its third quarter results on January 23.

Like many other traditional airlines, the Dutch carrier has not had an easy ride recently.

On January 6, it warned it might make an operating loss because the troubled global economy and threats of war were affecting traffic.

Last December, a court ordered KLM to pay its Italian counterpart Alitalia �157m as a penalty for walking away from an alliance between the two carriers.

In Amsterdam, shares in KLM fell by 0.10 euros to 8.90 euros.