Kevin O'Toole/LONDON
KLM HAS MOVED to patch up its strained boardroom relationship with Northwest Airlines, proposing that the carriers be locked into their alliance agreement for up to five years at a stretch.
Until now, the agreements have been ratified annually, but KLM chairman Pieter Bouw has proposed that this be changed to a rolling agreement, renewable every three to five years.
KLM says that Bouw discussed the issue during a "positive" recent meeting with Northwest president John Dasburg, and that he has agreed to consider the proposal.
The discussions appear to be part of a concerted attempt by KLM to put the alliance back on course after 1995's bitter boardroom row over shareholders' rights, which led to Bouw quitting his seat on the Northwest board. A further casualty has been the postponement of talks on creation of a cargo alliance.
At the centre of that dispute has been Northwest's fears that KLM is attempting to gain "creeping control". KLM has always denied the charge and says that Bouw made the point again in his discussion with Dasburg. "KLM doesn't want control, but the comfort of continuity in the alliance," says the carrier. In another display of co-operation, KLM has also concluded a deal to sell back the bulk of its preference shares to Northwest. The shares, which do not hold voting rights, were acquired by KLM in 1989 when it took part in the Northwest buy-out.
KLM stresses that the preferred stock holding was "-always intended as a purely financial transaction", with no strategic implications. The sale should net KLM around $387 million.
Although the stock repurchase is being greeted as a sign of growing trust between the carriers, it does not have direct implications for the shareholder-rights dispute.
KLM says that it is pressing ahead with its court challenge to the "poison-pill" measure adopted by Northwest. This effectively bars any one shareholder from holding more than 20% of voting rights. KLM holds 18.8%, but has options to convert its remaining preference shares in 1998, taking the total up to 23.5%. KLM has been angered that these options may be rendered worthless by the poison pill.
Source: Flight International
