Sources said that both sides were working hard to reach an agreement, but said it would take a month to finalise an agreement. The two companies confirmed on Wednesday following rampant market speculation that they were in talks to merge. But they underlined the discussions were at a preliminary stage and might not result in a deal. However, sources said the two airlines would like to move to a deal as quickly as possible.
Negotiations are now in the hands of investment banks, company representatives and lawyers.
Executives meet BA Chairman Colin Marshall and new Chief Executive Rod Eddington have met their KLM counterpart, Chief Executive Leo van Wijk and Chairman Conrad Oort, sources said. There had been widespread speculation that BA was poised to take over KLM, amid reports that the UK airline had appointed an investment bank to advise it on the deal. There had been repeated rumours following the collapse of the merger between KLM and Alitalia earlier this year. A merger between the two would create the world's third largest carrier behind United Airlines and American Airlines. The two European companies have US partners who are also rumoured to be merging.