As KLM increased its holding in Air UK to 100 per cent, speculation was mounting that the Dutch major was close to selling its 19 per cent stake in partner Northwest Airlines.
The move by KLM to sell its stake in Northwest is seen by analysts as the only course of action, since the 'poison pill' dispute started in November 1995, that will put the alliance back on track at a commercial level. 'They need to sell the stake if they want to develop the alliance because the governance argument has stopped them developing the alliance,' says Matthew Stainer, a London-based analyst at Morgan Stanley.
Speculation that the Dutch carrier will look elsewhere for a partner after disposing of its holding is generally considered as premature, as the alliance at the operating level is widely regarded as the most effective in the world.
A senior source at KLM indicates that the decision by president and chief executive Pieter Bouw to step down in August is intended to send a signal to its US partner that it wants to start afresh. There was considerable animosity between Bouw and Northwest's co-chairmen Alfred Checchi and Gary Wilson. KLM refuses to comment on suggestions that it will time the sale of its Northwest stake with the appointment of Leo van Wijk, who is currently managing director and chief operating officer, as Bouw's successor in early August.
But the Dutch carrier now admits that plans by Northwest to start selling its own tickets again in the Netherlands from August 'is certainly positioning from Northwest's point of view.'
Meanwhile, KLM's decision to increase its stake in Air UK from 45 to 100 per cent comes as the Dutch carrier continues to contemplate branding options for its regional feeder partners.
Bouw has already indicated that the carrier is set to unveil 'stronger branding of the KLM group' later this year. Besides Air UK, the group covers KLM CityHopper and Eurowings.
However Air UK cherishes its independence and the rest of Air UK's network, which encompasses its main hub at London/Stansted and its UK regional routes, would benefit less from a KLM identity.
The UK carrier will serve the Dutch capital from 15 UK points from September, including some routes it has taken over from KLM. And while the UK carrier is well positioned to take over more KLM routes, the latter's pilot contract restricts the number of flights which can be flown by outside carriers. Last year, around 40 per cent of Air UK's 3.6 million passengers were travelling from UK points to Amsterdam, and this is expected to reach 50 per cent this year.
KLM is paying an undisclosed sum for the remaining 55 per cent stake of Air UK held by British Air Transport Holdings, which is owned by three UK investment firms. Brussels must approve the deal.
M Odell/R Whitaker
Source: Airline Business
