British Airways will today confirm that it is entering into formal partnership negotiations with the Dutch national flag carrier KLM. If the talks eventually lead to a merger or alliance, it will create Europe’s largest airline and the world’s third largest (after United Airlines and American Airlines).

KLM's share price rose nearly 7% after news of the talks became public [WAMN, 5-Jun-00]; UK investors were less enthusiastic and responded by downgrading BA's share price by just under 4%.

News source: Financial Times