MERGER TALKS BETWEEN KLM, BRITISH AIRLINES AT CRUCIAL STAGE

MERGER TALKS BETWEEN KLM, BRITISH AIRLINES AT CRUCIAL STAGE

Merger talks by KLM Royal Dutch Airlines NV and British Airways PLC to create the world's fourth-largest airline are at a crucial stage, and analysts expect KLM to give ground in a dispute over the balance of power.

BA and the smaller Dutch flag carrier want to merge to secure their global status prior to 1993, when Europe's skies will be deregulated as part of the European Community's single market push.But to what extent BA would dominate the partnership has long been a key question. Recent press reports have said talks are near collapse because KLM is holding out for a 40 percent stake.

BA is reported to be sticking to a 70-30 stake ratio in its favor.

Neither airline would comment on the reports, but KLM said the talks were continuing uninterrupted.

"I think we're seeing a bit of bargaining through the newspaper columns," said one London-based banker.