EAGAN (AP) -- Continental Airlines wants a reluctant Northwest Airlines to relinquish its controlling interest in the Houston-based carrier.
This development could signal a battle between the chief domestic alliance partners as they ready to finalize their alliance with KLM Royal Dutch Airlines and Italy's flag carrier, Alitalia.
Continental's desire to repurchase shares owned by Northwest was made public during a Tuesday teleconference with Gordon Bethune, Contin-ental's chairman and CEO.
''The alliance between Continental and Northwest is beneficial to both carriers, and any transaction would be designed to preserve and strengthen the benefits of the alliance,'' Bethune said.
Northwest said in a statement that the airline is not eager to sell the block, which equals about 51 percent of the voting rights in Continental.
''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,'' the statement said. ''Northwest and Continental have a long-term, 10-year comprehensive commercial cooperation agreement which is generating significant and growing economic benefits for both parties.''
Northwest acquired the block of Continental stock from a private investor as a defensive strategy in January 1998 to prevent other major airlines from merging with Continental.
Northwest wanted to lock up Continental as its domestic alliance partner to compete against the world's largest airlines at a time of heavy consolidation in the industry.
At the time, investors and stakeholders were told that Northwest and Continental would be the second-largest U.S. carrier in terms of revenues if the airlines operated side-by-side.
Acquired for about $500 million, the block represented about 14 percent of Continental's total outstanding equity, but about 51 percent of the voting rights. Under their deal, Northwest and Continental agreed to an operational partnership that promised to keep separate management.
Phillip Baggaley, airline industry analyst for Standard & Poor's, said Continental's desire to shed Northwest as a powerful shareholder is not surprising.
Brainerd Dispatch ©2013. All Rights Reserved.