NORTHWEST, KLM NEAR MARKETING PACT DECISION

NORTHWEST, KLM NEAR MARKETING PACT DECISION

Northwest Airlines and KLM Royal Dutch Airlines should decide by midsummer whether to pool all their cargo operations and create a joint marketing system, a top Northwest official said.

That idea is "the big banana" in a bowl of several choices that the two aviation giants could make to work together more in global cargo markets, said David Behrends, vice president for cargo marketing for Northwest.At this point, the two companies aren't convinced that a joint program would be best for them, Mr. Behrends told air freight forwarders here Tuesday at a meeting of the International Air Shipping Association.

Mr. Behrends said in an interview that neither company wants to risk trading away lucrative marketing rights in its home territory - Northwest in the United States, KLM in Europe - unless the result will bring in "more

dollars, or guilders."

But he said there is also a cost from delaying a plan: "If there is an opportunity to be had, we're missing it."

Analysts said a cargo merger would help Northwest boost its limited exposure in the trans-Atlantic and would give KLM a helping hand in the United States.

"The issue with KLM is that they need people; they can't do it themselves," said Brian Clancy, director of systems logistics planning for Global Aviation Associates, a Washington-based consulting firm.

Mr. Clancy said a joint venture would marry Northwest's operational strengths with KLM's logistics and marketing prowess.

Although KLM controls nearly 40 percent of the equity in Northwest, the companies have struggled to integrate their operations. Now airline planners imposed a deadline on themselves, Mr. Behrends said.

Northwest handles KLM freight at Minneapolis, while KLM sells cargo for Northwest in Canada and will soon do the same in Indonesia. KLM has also launched flights with combi aircraft - planes that carry main deck and belly cargo - from Amsterdam to Northwest's hubs in Detroit and Minneapolis.

Mr. Behrends waved off comparisons to recently collapsed merger talks between KLM and British Airways, saying the hitch in Northwest and KLM's plans does not concern control but is simply a judgment on whether a full cargo partnership would generate more money.