KLM to pour millions into Northwest

November 20, 1992|By New York Times News Service

KLM Royal Dutch Airlines said yesterday that it is prepared to inject $50 million into Northwest Airlines to help the ailing American carrier's effort to persuade its banks to extend a new credit line of $300 million.

Meanwhile, all six of Northwest's unions said they saw a need to grant the carrier concessions of $300 million a year and that they were prepared to begin negotiations.

A group of banks led by Bankers Trust is seeking to put together a $300 million loan package, but some banks have been reluctant to go along until other investors make a commitment. KLM, which has a stake of more than 50 percent in the airline, was an obvious source of further money.

KLM said in a statement that "parties directly involved in Northwest are working to put together a secured loan facility of a minimum of $250 million." The Dutch airline said that it was willing to participate if other lenders committed themselves for the full amount.

KLM, which invested $400 million in Northwest when it was taken over by a group led by Alfred Checchi and John Wilson in 1989, said that the new money "will allow Northwest to meet its near-term financial needs and should enable Northwest to take measures which will lead to a structurally healthy position."

Northwest has used up its remaining credit lines and has been seeking to get its banks and investment partners to put up money to help it through a period of low traffic and heavy losses.

John Dasburg, president of Northwest, said the airline was "gratified at this time to receive the support of our partner, KLM."

Of comparable importance was yesterday's announcement by six Northwest unions that they had concluded concessions of about $300 million a year for three years were justified to help the airline solve its current problems.

Craig Hofstetter, a spokesman for the Air Line Pilots Association, said talks on the concessions would be opened with the company. "Both the company and the unions are well aware of the time sensitivity of the situation," he said.

The cash position of Northwest is eroding, and the longer it takes to get all the groups together in a rescue plan the more the pressure builds for the carrier to file for protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.

Baltimore Sun Articles
|
|
|
Please note the green-lined linked article text has been applied commercially without any involvement from our newsroom editors, reporters or any other editorial staff.