KLM has agreed to sell its stock in Northwest Airlines, in a deal which draws an end to the bitter dispute over ownership. It will also allow the carriers to start expanding their alliance, including the search for new partners, with Alitalia as a prime candidate.
KLM has agreed to sell the whole of its 19%holding of voting stock back to Northwest in four tranches, starting this month and running through until 2000.
The sale, expected to raise close to $1 billion, settles the protracted dispute which erupted nearly two years ago when Northwest sought to limit KLM's shareholding, fearing that the Dutch flag carrier was seeking to gain control of the company. KLM responded to that threat with legal actions, which are now to be dropped.
As part of the settlement, Northwest has committed itself to a long-term alliance with KLM which will last for at least the next ten years. Underlining their new relationship, the airlines are to expand co-operation on passenger services and to link sales operations. An alliance on cargo services, put on hold during the dispute, is also being developed.
The carriers will go on to explore the inclusion of "additional partners". Alitalia, which already has an agreement with Air France, is known to have had high-level contacts with KLM over the last year, and such interest has been confirmed by state parent IRI.
Source: Flight International