Despite denials by Dutch carrier KLM that it is close to forming an alliance with Air France, industry observers say the two European carriers may announce a new link sometime this week.

The boards of the two airlines are reported to be meeting on Wednesday, although neither side has given official confirmation.

KLM has been fending off persistent media speculation about its future relationship with the French national carrier, saying only that the two airlines are in talks and that a decision will be made by the end of this year.

The Dutch company, which has previously held unsuccessful alliance talks with British Airways and ditched a marketing tie-up with Italy`s flagship carrier Alitalia, will become a member of the Skyteam global airline alliance if it can finalize a deal with Air France.

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