Skip to main content

Threat Seen to Northwest-KLM Pact

The alliance adds more than $2 billion a year to the airlines' combined revenue.
  • Author:
  • Publish date:

Updated from 12:40 p.m. EDTNorthwest (NWAC) shareholders have another reason to be white-knuckled: the potential that the airline could lose a lucrative partnership with KLM Royal Dutch Airlines.

Shares of the Eagan, Minn., airline lost as much as 3.2% Monday morning after a report in

The Wall Street Journal

highlighted that risk. The stock recovered somewhat later in the session and closed down 8 cents at $4.67.

For more than a decade, Northwest and KLM have operated a joint venture linking KLM's Amsterdam hub to a slew of North American cities. The airlines are also able to sell tickets on each other's connecting flights, giving their customers more choices. The alliance, under which the airlines split all costs and all revenue, adds more than $2 billion a year to the partners' combined revenue, according to the



The partnership, under which the two airlines share sensitive pricing information, has long enjoyed antitrust immunity from the U.S. government. But that could change, because

Air France

purchased KLM in May 2004, and Air France already had a trans-Atlantic partnership with Northwest rival

Scroll to Continue

TheStreet Recommends

Delta Air Lines

(DAL) - Get Delta Air Lines, Inc. Report


Regulators may frown upon a three-sided trans-Atlantic alliance involving two American carriers.

Northwest spokesman Kurt Ebenhoch acknowledged the airline's joint venture with KLM could be affected if regulators don't grant a request for antitrust immunity that Northwest, KLM, Air France and other airlines that are members of the broader SkyTeam alliance filed last September.

Still, Ebenhoch said various parties have supported the request, including all of Northwest's hub airports and large corporate customers such as


(F) - Get Ford Motor Company Report


The issue comes into the spotlight as Northwest continues to struggle to reduce labor costs and persuade lawmakers to give it and other airlines more time to fund their pension plans. Both Northwest and Delta have warned they may have to file for bankruptcy if Congress doesn't give them such an extension.