AIRLINES : KLM Joins With Checchi in His Effort to Acquire NWA
KLM Royal Dutch Airlines said Thursday that it has joined with Los Angeles financier Alfred A. Checchi in his bid for NWA Inc., the parent of Northwest Airlines.
KLM, which has been looking for a U.S. partner, issued a statement saying it had agreed to buy a “minority equity interest in a corporation formed by Alfred Checchi” to bid for NWA.
KLM spokeswoman Odette Fodor said a confidentiality agreement between Checchi’s group and NWA prohibited disclosures about the size of KLM’s investment. However, since foreigners are not allowed to own more than 25% of a U.S. airline and need government approval to buy more than 10%, KLM’s stake would probably be small.
Checchi, a former Marriott Corp. executive, is also backed by the Australian conglomerate Elders IXL and Bankers Trust, a New York bank. He is competing against at least three other bidders for the airline: Los Angeles billionaire Marvin Davis, Pan Am Corp. and Northwest’s 22,000-member machinists union.
Shares Hit High
NWA has refused to say how many bids there have been or to disclose any other details.
Northwest is the largest U.S. carrier in the North Pacific region, with more flights to Japan than any other U.S. airline. Its board of directors is considering alternatives for the company’s future, including a sale of the company.
NWA’s shares rose to a new high in trading Thursday in reaction to news of KLM’s participation in the Checchi bid. NWA shares closed at $108.25, up 87.5 cents in trading on the New York Stock Exchange.
KLM was among the foreign airlines that were reported recently to be considering participation in Pan Am’s bid for NWA. On Thursday, however, Fodor said the Dutch airline never had any interest in joining with Pan Am.
An alliance with KLM could benefit Northwest, because the Dutch airline could feed European passengers into Northwest’s domestic route system. The partnership could also help KLM, because Northwest, which has a small European presence, could feed Europe-bound travelers into KLM’s network.
