Northwest, US Airways may link Liz Fedor Star Tribune Published Jun 13, 2002 Northwest Airlines might form an alliance with US Airways, which has suffered massive financial losses since Sept. 11 and applied for a $900 million federal loan guarantee on Monday. If an agreement emerges, it would likely be a code-sharing arrangement "as opposed to an outright merger," said Michael Friedman, an equities analyst at American Express. Friedman said a deal between Northwest and US Airways was discussed in recent days by airline analysts. Northwest spokesman Bill Mellon declined Wednesday to say whether the airline is pursuing such an arrangement with US Airways. "We don't comment on rumors of that ilk," Mellon said. "The airlines are reluctant to talk about it for obvious reasons," Friedman said. To his knowledge, he said, a deal hasn't been finalized. "They don't want to make any pronouncements before they are done." Eagan-based Northwest already has a code-sharing agreement with Continental Airlines -- a partnership designed to boost revenue for both carriers. That alliance means "Northwest's passengers are also able to connect through Continental's hubs in Newark, Houston and Cleveland to additional cities not previously served by Northwest," the airline said in a report to the Securities and Exchange Commission. The agreements include more than 250 destinations, Northwest said in the filing. "Through additional domestic and international connections, Northwest has increased its market share and enhanced its revenue." Northwest and Continental also coordinate airport facilities, frequent-flier programs, purchasing and sales. Northwest says that coordination has cut operating costs. In mid-May, US Airways CEO David Siegel told the Washington Post his airline was talking with other major carriers about forming alliances, which would help the carrier improve its financial health. Arlington, Va.-based US Airways, the nation's seventh-largest airline, has racked up $1.43 billion in net losses since the September terrorist attacks. Siegel said Monday that the airline is negotiating with unions, vendors, lessors and other stakeholders to cut more than $1.3 billion in annual costs. Siegel became US Airways' president and chief executive in March, and he has focused on creating a financial restructuring plan to return the airline to profitability. In a statement released Monday, US Airways attributed its steep financial losses to a drop in travel after the attacks, higher security costs, the prolonged closing of Washington's Reagan National Airport, and the major impact of the attacks on the airline's East Coast route network. If Northwest, the fourth-largest airline, forges an agreement with US Airways, the struggling airline would gain access to Northwest hubs in Minneapolis-St. Paul, Detroit and Memphis and passenger markets across the Midwest. Northwest would link with US Airways hubs in Charlotte, Philadelphia and Pittsburgh. Code sharing is a technical term within the airline industry. On its Web site, US Airways defines it as "a commercial agreement between two airlines that allows an airline to put its two-letter identification code on the flights of another airline as they appear in computerized reservation systems." US Airways said, "Airlines that share codes typically coordinate schedules to minimize connection times as well as provide additional customer services, such as one-stop check-in and baggage checked through to the final destination."