=20 ---------------------------------------------------------------------- This article was sent to you by someone who found it on SF Gate. The original article can be found on SFGate.com here: http://www.sfgate.com/cgi-bin/article.cgi?file=3D/news/archive/2003/09/12/f= inancial0940EDT0036.DTL ---------------------------------------------------------------------- Friday, September 12, 2003 (AP) Report: Air France and KLM to announce merger (09-12) 06:40 PDT PARIS (AP) -- KLM Royal Dutch Airlines is in advanced discussions with Air France on a possible alliance, a spokesman for KLM said Friday, following statements France's transportation minister made during a magazine interview. The French government, which owns 54 percent of Air France, "will choose the best moment to sell a part of its stake," Gilles de Robien said in the weekly Le Revenu. "If this happens it will be through a share swap." A spokesman contacted at Air France's offices in Paris said the company would not comment on the subject. However, KLM said Friday that talks were in "an advanced stage" but declined to comment on whether the alliance talks included the possibility of a full-scale merger. "Our talks with Air France are in an advanced stage, and they're going well," KLM spokesman Bart Koster told The Associated Press in Amsterdam. "But there are still points of discussion on the table that we haven't resolved and that will have to be resolved before we can say 'yes,' we have an agreement and set a date." "We're confident that we'll be able to make a choice about a strategic partnership this year," Koster said. French financial newspaper L'Agefi reported Friday that the two airline companies would announce their long-discussed merger Sept. 18. The boards of both companies are scheduled to meet Sept. 17 to approve t= he operation, where Air France will buy 100 percent of KLM, while KLM shareholders will receive 15 percent of the French government-owned stake in Air France, L'Agefi said. The French government will then sell 20 percent of its 54 percent stake = in the airline on the market, thus reducing its stake in the combined entity to under 20 percent, the newspaper said. Talks with Air France are focused on ensuring guarantees about maintaini= ng KLM's brand, its Dutch identity, Schiphol airport as a hub and its partnership with U.S. airlines, Koster said. KLM has been cautious in officially commenting on the progress in talks with Air France, in part due to its botched hopes over the last years to tie up with British Airways and Alitalia. Koster said that British Airways, with which it broke off talks about an alliance last month, has left the door open for a possible resumption of negotiations should alliance talks break down with Air France. On the Net: www.agefi.fr www.lerevenu.fr =20 ---------------------------------------------------------------------- Copyright 2003 AP