NW to break alliance with KLM!?!

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Member for

24 years 2 months

Posts: 4,887

I know I promised to post pictures and gloat when reaching the 200 posts, but this one takes priority.

According to a post on the Dutch Spotters Mailing List, Northwest Airlines has decided to drop the alliance with KLM! This has not yet been officially announced though. It is interesting to note that the KLM shares have gone up 3,1%, the highest increase for today on the Duch stock exchange (AEX). It looks like investors like what they are hearing.

Since Northwest is negotiating with Air France, it would seem the (somewhat expected) deal between AF and KLM is of the table. This would make negotiations with BA (and partner AA) much more easier.

I probably don't have to tell you that NW and KLM are the world's oldest and most comprehensive alliance.

The post at DSML (Dutch only)
het nieuws is vandaag bekend gemaakt nog niet officeel maar Northwest gaat de fusie tussen klm breken hier bij was het al te zien aan de beurzen klm ging met 3,1 procent in de plus HALF 4 daarmeej de 3e beste stijger van n.l nu klm een anderre partner aan het zoeken is Zoals British Airways waar ze meej aan het onderhandelen zijn en Northwest met Air France is aan het onderhandelen hoopen dat KLM het gaat proberen met BA ik hoop iedergeval van wel..
http://groups.yahoo.com/group/dutch-spotters/

Original post

Member for

20 years 10 months

Posts: 2,513

So does this mean that Continental will be backing out of the deal too since they have such a close working relationship with Northwest?

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24 years 2 months

Posts: 3,279

There are so many rumours going around at the moment that it is hard to know what to believe. Either way I believe British Airways would be a better fit for KLM as a European partner though to give up Northwest would leave them somewhat vulnerable because American could never give such a strategic alliance. But interesting time nonetheless. Wasn’t an announcement expected in September some time?

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24 years 2 months

Posts: 4,887

It seems to have been a false alarm. Someone else on the mailing list posted the following newspaper article [text in brackets is my addition]:

Reuters: NWA urges partner KLM to ally with Air France-paper

Northwest Airlines, the long-standing transatlantic partner of KM, is urging the Dutch airline to select Air France and not British Arways as its alliance partner, a newspaper said on Saturday.

Dutch evening paper NRC Handelsblad [very reliable I may add], reporting from a fleet renewal presentation by NWA in Detroit, quoted Northwest president Doug Steenland as saying; "From our point of view it can only be Air France." KLM is keeping the markets waiting for what may be the most important decision in the airline's 84-year history.

Chief executive Leo van Wijk has said the Dutch company, which has the colour sky blue on its fuselage, will make a decision before the end of the year but there are increasing signs such a decision may be just months or weeks away.

At stake is whether Europe's fourth-largest carrier joins the Skyteam of Air France and Delta Air Lines or "oneworld" of British Airways and American Airlines AMR.

The international airline industry is consolidating around just three alliances -- the other being the Star Alliance with Lufthansa and UAL that can offer the best connection networks, lowest handling and maintenance costs and biggest marketing power.

KLM officials say that talks with Air France are more intense than those with BA. Financial analysts polled by Reuters expect a pact with Air France.

Whatever the decision, in the longer run KLM is expected to be absorbed into either the French or British company.

KLM and Northwest have had a transatlantic alliance since 1989 when KLM took a 20 percent stake in the Minneapolis-based airline as a step towards forming its own "Wings" global alliance. But in 1997 KLM sold the stake back to NWA and they signed a 10-year commercial agreement.

"There are procedures by which the pact between KLM and Northwest can be broken, but that is not possible before 2007," Steenland told the NRC, adding that even after that date it would take at least three years to untie the operations.

KLM can ill afford such a messy separation after its unsuccesful 1997 link with Alitalia, broken in 2000 at the cost of a high financial penalty.

"Even after the biggest crisis in commercial aviation, the KLM-Northwest alliance will survive and be one of the most important players on the transatlantic routes for passengers and cargo," Steenland said.

In the U.S., Delta, Continental and NWA have their own alliance which has a 35 percent market share

Soory for any confusion I may have caused.

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24 years 2 months

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This is getting interesting what with the Swiss rumours going around as well at the moment. Hopefully some news in the coming weeks on the fate of both airlines.

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20 years 9 months

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I wonder if that will change the mood at AMS, if Northwest will decide to scale down their operations at Amsterdam, because at the mom they have heaps of operations at AMS, its like their Minneapolis Hub!

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24 years 2 months

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I suppose they probably would scale back operations if KLM broke the alliance. If Northwest joined Skyteam then certainly they would operate more in the way of flights to Europe via CDG instead.

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24 years 2 months

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If the NW/KLM alliance where to be broken up than NW will at the very least scale down its AMS operation, possibly even cancel it alltogether.

I'd expect that the new partner of KLM will fill up the blanks. If the NW/KLM alliance is broken than the most likely alliance partners are BA/AA. Amsterdam would definately get more BA and very likely get some AA. At the moment AA does not fly to Schiphol.

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24 years 2 months

Posts: 3,279

But the trouble would be there that KLM could never benefit as much with American as it did with Northwest in terms of envelopment. Certainly they would not be as well integrated into Amsterdam as Northwest currently are though I suppose it could be a good time for KLM to develop itself into a respective niche carrier if a relationship with American was forged.