Dutch give unloved BA the brush-off

BRITISH Airways chief Rod Eddington, already reeling from US regulators blocking his cherished transatlantic alliance with American Airlines, saw his shares dive another 11p to 206p after Dutch airline KLM said it was not looking to renew talks on a long-term alliance.

The two airlines discussed a tie-up two years ago, but talks ended in September 2000. It is doubtful that BA was burning to resume them, but KLM's statement leaves it looking unloved.

It is left with a marketing link with American through their 'oneworld' alliance and co-operation with KLM on Middle East flights. But the main focus for BA now will be Eddington's 'Future Size and Shape' proposals, to be unveiled in mid-February. They are likely to suggest cutbacks on loss-making short-haul routes.

Broker ABN Amro said BA would have to 'completely reevaluate its alliance strategy' and that its shares could fall to 182p. With losses heading for £600m, a rights issue cannot be ruled out. But Merrill Lynch thinks next month's proposals could trigger a recovery.