Chris Jasper/LONDON
European Union competition chiefs have blocked KLM's planned take-over of charter carrier Martinair Holland pending an investigation into the proposed deal.
The European Commission (EC) announced the probe on the day that the Dutch flag carrier revealed that it had lost NLG29 million ($15 million) during the last quarter of 1998.
KLM owns 50% of Martinair, and had hoped to acquire the remaining 50%, held by transport company Royal Nedlloyd, in a deal announced a year ago.
The EC says an initial examination of the proposal raised "serious doubts about its compatibility with the common market as regards its effect on competition", especially in terms of the impact on the availability to tour operators of leisure flights from Amsterdam Schiphol and other Dutch airports.
KLM is a major charter operator through its Transavia subsidiary, and a merger with Martinair would make it the largest single carrier between Amsterdam and holiday destinations in the Mediterranean .
The EC contends that on these routes and some to North America, the merger "-could create or reinforce a dominant position". KLM and the commission will now hold further talks during a four-month investigatory period.
The airline's third-quarter loss compares with a NLG46 million profit generated in the same period last year, while operating revenues fell to NLG3.14 billion from NLG3.23 billion. Operating profit for the quarter was NLG22 million, against NLG118 million earned in 1997.
KLM blames its poor performance on the Asian downturn and consequent scramble by airlines to transfer large amounts of capacity to the North Atlantic, which it says "-has had a negative effect on operating conditions".
The carrier adds that the result was also affected by the "the after effects of the Northwest Airlines strike", although the dispute at KLM's alliance partner took place in the previous quarter.
The result includes subsidiary carriers KLM Cityhopper, KLM uk and Transavia, but not Martinair, which would have doubled the group's operating profit for the quarter.
KLM says the net loss was in line with expectations and is sticking to its earnings per share forecast of NLG6.50-NLG7.0. With a number of European airlines set to report first quarter figures soon, the KLM performance could presage a wave of poor results.
Source: Flight International
