AMSTERDAM, Oct 22: The Dutch airline KLM and British Airways are seeking ways, short of a full alliance, jointly to reduce costs and boost revenues, KLM spokesman Bart Koster said on Monday.

We are in no way involved in talks which would lead to an alliance with BA, Koster said shortly before the Dutch company announced a 25-per cent cut in European fares.

Merger negotiations between the two carriers broke down in September 2000.

Koster said that discussions over the weekend had focused on ways of increasing revenue while reducing costs within the confines of European legislation.

That could mean operating certain transatlantic flights on a code-sharing basis, the spokesman said.

Decisions would aim at ensuring the Dutch airline’s near-term financial stability in an unpredictable economic environment.

KLM cannot foresee what the situation will be beyond the next six months, Koster said.

BA chief executive Rod Eddington had announced on Sunday that his company was in talks with KLM to explore ways of increasing cooperation.

Earlier on Monday the Financial Times reported that the British and US governments were to discuss liberalising air services, which could pave the way for an alliance between BA and American Airlines.

A joint venture between BA and American would be the most powerful force on the North Atlantic and would dominate services between the US and Europe.

On Friday, France and the United States agreed to ease restrictions on air traffic between those two countries, in a decision that was expected to benefit Air France and Delta Airlines.

Meanwhile, KLM also announced on Monday that it was cutting the price on tickets to European destinations by 25 per cent until March 31, 2002, in order to tempt more travellers into the company’s airplanes.

Company spokesman Frank Houben said: We hope to encourage more people, who are hesitating, to take an airplane after the sharp fall in passenger numbers since the September 11, attacks in the United States.

To benefit from the reduction, passengers must reserve seats by November 22, and tickets can be changed only once, KLM said. Cancellations are to cost passengers $22, the company also said.—AFP