SkyTeam says would welcome KLM, Continental entry

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SkyTeam says would welcome KLM, Continental entry  =

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Thursday November 14, 2:37 PM EST =


(Adds comments and details throughout)

By Estelle Shirbon

VENICE, Italy, Nov 14 (Reuters) -The SkyTeam alliance of international ai=
rlines, seeking to extend its reach, said on Thursday it would welcome Du=
tch flag carrier KLM and U.S. carriers Continental Airlines and Northwest=
 Airlines as members.

SkyTeam, a marketing alliance of six airlines led by No. 3 U.S. carrier D=
elta (DAL) and Air France (AIRF) ,said bringing on the three airlines wou=
ld allow it to compete even more aggressively against bigger rivals OneWo=
rld and Star Alliance.

"These are three major companies, three significant players which maybe w=
ill join SkyTeam," Air France CEO Jean-Cyril Spinetta told a news confere=
nce just after a meeting of all six SkyTeam member airline chiefs.

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"This would make us the first or second airline alliance in the world," s=
aid Francesco Mengozzi, head of member airline Alitalia (AZPa).

KLM (KLM) is already in talks with Air France to develop closer ties but =
doubts had lingered as to whether it would be welcome within SkyTeam due =
to an ongoing conflict with jilted partner Alitalia.

KLM pulled out of a tie-up with Alitalia two years ago, balking at state =
control over the Italian airline.

The SkyTeam CEOs gave no timeframe for possible entry of KLM, Continental=
 (CAL) and Northwest (NWAC) into the marketing alliance, saying it depend=
ed on the progress of the Air France/KLM talks.

Air France's Spinetta said the talks were exploring whether consolidation=
 between the French and Dutch flag carriers' networks would be profitable=
 for both airlines as well as for Air France partner Alitalia.

"If these discussions are positive we will enter more formal phases of ne=
gotiations," Spinetta said. Asked whether an Air France/KLM tie-up could =
include a share-swap, he said a swap was not under discussion in the curr=
ent talks, but did not rule it out in the future.

Spinetta also said further consolidation in the European airline industry=
, hard hit by a downturn in demand for air travel, was both inevitable an=
d desirable.

In a similar vein, Mengozzi said he expected the European airline industr=
y would look radically different in a few years, with far fewer national =
flag carriers.

Delta Chief Executive Leo Mullin said the entry of Continental and Northw=
est into SkyTeam would depend on the outcome of a U.S. administration rev=
iew of a domestic U.S. alliance deal between Delta and those two airlines=
, which he said he was optimistic would be positive.

SkyTeam, which also includes Korean Air (03490), Czech Airlines (CSA) and=
 AeroMexico, would welcome other new partners in the longer term, several=
 of the CEOs said.

Noting that Air France recently signed a code-share deal with Russian car=
rier Aeroflot (AFLT) on flights between Paris and Moscow, Spinetta said t=
he ultimate goal was for Aeroflot to join SkyTeam, though that would not =
take place for a few years.

Mullin added that SkyTeam felt it had a gap in South America and would be=
 keen to enlist another South East Asian carrier, but he did not mention =
any names of possible partners in either region.

Mullin also said Delta would make an announcement in two to four weeks on=
 the shape and size of a planned new low-cost airline, as well as the nam=
e of the person who would lead it.

Star Alliance is the world's largest airline network and includes UAL Cor=
p's (UAL) United Airlines, Germany's Lufthansa (LHAG) and Japan's All Nip=
pon Airways (9202).

OneWorld includes British Airways Plc (BAY), Iberia (IBLA) and Australia'=
s Qantas Airways Ltd (QAN). =



=A92002 Reuters Limited. =


Roger
EWROPS

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