Northwest Airlines confirmed yesterday that it has been approached by Continental Airlines about ending the ownership position Northwest acquired two years ago as part of the marketing alliance between the two airlines.
In a brief statement, Northwest said: "We have received an informal inquiry from Continental regarding Northwest's interest in selling to Continental the Continental Class A common stock held in a voting trust by Northwest." Northwest said it had acquired the stock as a "strategic asset to insure Continental's independence as an air carrier and an alliance partner."
The stock, 8.7 million shares formerly owned by Continental investor David Bonderman, is currently valued at about $500 million. Although the stock amounts to only 14 percent of Continental's common shares, it represents 51 percent of voting rights of Continental shares, giving Northwest effective control over Continental.
Northwest and Continental are the nation's fourth- and fifth-largest airlines, respectively.
The Justice Department filed an antitrust suit against the stock deal in October 1998, claiming the alliance "would lead to higher ticket prices and worse service for the over four million passengers traveling on the routes dominated by the two airlines." But the government never challenged the overall alliance in its legal action, which is still in the early stages of discovery.
Although no one from either the airlines or the Justice Department would comment on yesterday's actions, government sources said the return of the Continental stock to Continental would probably go a long way toward ending the government's objections to the alliance.
The only public comment from the two airlines yesterday beyond the Northwest statement was that each said it was committed to maintaining the alliance, which they said had proved profitable for both carriers.
"It's really a trial balloon," said one source familiar with the situation.
There was no indication yesterday that Northwest was willing to part with the Continental shares in the absence of some other agreement that would guarantee Continental's future independence and ensure that the marketing alliance would continue.
Continental is now expected to come back to Northwest with a broader proposal dealing with the independence issues, sources said.