Merger talks between British Airways and KLM Royal Dutch Airlines were jettisoned yesterday after the two sides failed to agree on the issue of management control.

According to BA chief executive Rod Eddington, the sticking point was agreement on a management structure that would give BA overall voting control of a merged company while allowing Netherlands nationals a majority on its supervisory board.

This, KLM argued, was essential if it was not to compromise its international traffic rights [especially in the US which has consistently failed to reach agreement with the UK on an ‘open skies’ treaty].

A statement, issued jointly by Eddington and his KLM counterpart Leo van Wijk, said: "We always recognised that this would be a complex transaction, involving not only commercial and economic issues, but also aero-political, regulatory and other matters. Although we made considerable progress, it has not been possible to resolve these." The statement added that relations between the two carriers remain "amicable".

Had the merger succeeded, it would have created the worl's third largest airline.

News source: Financial Times