Airline mergers may become more common in future

The two airlines are in the advanced stages of negotiating KLM's entry into the SkyTeam group, a statement said on Wednesday.

Air France - which already has ties with US carrier Delta Air Lines and Italy's Alitalia in the SkyTeam marketing alliance - has been trying for months to recruit KLM.

There is speculation that the French and Dutch airlines may go even further, perhaps striking a comprehensive deal in which the two would hold one another's shares.

Prime Minister Silvio Berlusconi has promised a speedy privatisation of Alitalia, so the airline is not left out in the cold.

During a telephone conversation with the French Prime Minister Jean-Pierre Raffarin on Tuesday both "agreed that the development of alliances via the consolidation of European companies constituted a common goal for economic policy", his office said.

'More mergers'

KLM has already made several failed attempts to merge with British Airways and walked away at the last minute from a deal with Alitalia in 2000.

The airline was reported on Wednesday to be requiring more time to negotiate the deal which focuses on maintaining KLM's brand, its Dutch identity, Schiphol airport as a hub and its partnership with US airlines.

European airlines need to retain their national identities because of bilateral aviation agreements between their governments and third countries which govern where airlines can fly.

However, analysts see more alliances in the future once the bilateral rules dating back more than half a century are modified.