NYTimes.com Article: Air France and KLM Chiefs Talk of U.S. Plan

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Air France and KLM Chiefs Talk of U.S. Plan

October 3, 2003
 By EDWARD WONG





The chief executives of Air France and KLM Royal Dutch
Airlines, who plan to merge their companies, said yesterday
that they might ask the Justice Department to permit Delta
Air Lines and Northwest Airlines to join them in one large
trans-Atlantic marketing partnership. But they said they
would not seek additional immunity from antitrust laws.

During an interview in Manhattan, Jean-Cyril Spinetta and
Leo M. van Wijk, the chief executives of Air France and
KLM, discussed their intentions regarding Delta and
Northwest. Delta and Air France are the founding members of
the SkyTeam code-share alliance. They also have antitrust
immunity, which gives them great leeway to coordinate
flights and pricing without being brought up on charges of
anticompetitive practices. Northwest and KLM have their own
alliance, which has antitrust immunity.

Antitrust immunity among all four carriers would be the
"best situation," Mr. Spinetta said, but the European
executives will not ask for that right now. At most, they
will ask the Justice Department to permit the four airlines
to form a single code-sharing alliance, possibly under the
SkyTeam umbrella, he and Mr. van Wijk said. In such an
alliance, airlines can sell seats on one another's flights
and passengers can choose which frequent-flier program is
credited for the miles flown.

Both chief executives indicated that they thought American
regulators would not favor giving antitrust immunity to all
four airlines.

Air France and KLM said on Tuesday that they had agreed to
merge into a holding company to be called Air France-KLM,
forming the world's largest airline by revenue. The two
airlines would operate separately. The Dutch government and
two Dutch foundations would have majority voting rights
over the KLM subsidiary for three years.

Air France and KLM will submit the merger and related
marketing partnerships to European and American regulators
for approval at the end of the month. They said they
expected responses six to eight weeks after that.

"The U.S. government, one hopes, sees that the airline
industry has to consolidate," Mr. Spinetta said.

Mr. van Wijk added that "we have no guarantees" when it
comes to obtaining approval from regulators.

Rivals of the two airlines have called for regulators to
scrutinize the merger and any related alliances for
anticompetitive issues.

Jeff Angel, a spokesman for British Airways, said
yesterday, "We're encouraging regulators to give it the
same scrutiny that was given to British Airways and
American Airlines when we applied for antitrust immunity."
That application was rejected twice by regulators in the
United States. The two airlines, though, received approval
in May for a code-sharing alliance.

http://www.nytimes.com/2003/10/03/business/worldbusiness/03AIR.html?ex=1066188392&ei=1&en=07458a682d685a30


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