BA100: 51. The Deal That Never Happened, KLM

100 Years Of British Airways: BA’s repeated missed chances to merge with KLM

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KLM Aircraft
KLM Aircraft (Image Credit: KLM)

Welcome to our 100 part series on the history of BA and its predecessor airlines.

In 100 years, relationships between BA and other airlines have come and gone.

Whether it’s a simple codeshare with Emirates or an equity stake in Qantas, for one reason or another, both sides have moved on.

If there’s one airline in the world that BA should have got together with, but didn’t, it was KLM. This was not for a lack of trying. BA and KLM held merger talks in 1992 and 2000 and both fell through.

BA and KLM also held talks in the late 1980s in each buying a stake in a new subsidiary of Sabena in Belgium, Sabena World Airways, to create a new hub in Brussels. This fell through because of the poor financial health of Sabena.

On the second merger attempt the main issues were control and anti-trust immunity. KLM benefited from anti-trust immunity with Northwest Airlines which required the airline to be majority-controlled by Dutch nationals. BA insisted on having full control of the combined airline. This would have required KLM to a subsidiary of a combined BA-KLM controlled by BA. KLM baulked at the idea.

The attractions were obvious. Amsterdam Schiphol airport, with its four runways, is in close proximity to the UK. KLM serves very many UK regional airports that BA doesn’t. It also has a much broader route network. Joint marketing of flights via hubs in Amsterdam and London would have provided a strong proposition for all UK flyers, not just those in London.

KLM Long-Haul Network
KLM Long-Haul Network (Image Credit: Air France-KLM)

KLM merged with Air France in 2004. BA, after a period of isolation in European consolidation, merged with Iberia under the umbrella of IAG in 2011.

Whilst, like with KLM, there were similar concerns about how two different airlines could come together, an answer was found in the form of a “brand agnostic” parent that would focus on cost & revenue synergies whilst leaving day to day operations in each airline’s hands.

The current CEO of IAG Willie Walsh has said on many occasions that a deal with KLM should have happened and talks would not have broken down on his watch. Willie Walsh rates KLM as an airline very highly and wouldn’t pass at the opportunity to have KLM in IAG.

Air France-KLM has pursued integration with nowhere near the same vigour as IAG. There are evident tensions between Air France and KLM with investment decisions between the two airlines viewed as a zero-sum game. This is further complicated with both the French and Dutch Governments holding stakes in Air France-KLM.

Unfortunately, the ship has now sailed. Virgin Atlantic is to combine its transatlantic joint-venture with Delta with Air France-KLM and will now be pursuing the very same opportunities with KLM that BA could have.

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