MAS, KLM seal pact to boost their networks

MAS, KLM seal pact to boost their networks

KUALA LUMPUR (AFP): Malaysia Airlines System (MAS) and Dutch
carrier KLM agreed Saturday to intensify cooperation and work
towards an alliance over the next two years to boost their
networks and cut costs.

But the Malaysian carrier stopped short of saying whether it
would join the Wings Alliance which KLM is working on with U.S.
Northwest Airlines.

KLM president Leo van Wijk and MAS managing director Mohamad
Nor Mohamad Yusof signed a two-year alliance coordination pact,
an extension of their code-sharing flights since 1998.

"On both sides, we will look into how we can optimize the
network by offering on one end the best services to our customers
and reduce our costs as much as possible," Van Wijk told a joint
press conference.

He said flight frequency between Kuala Lumpur and Amsterdam
was expected to improve over the long-term. KLM currently flies
six times a week to Malaysia, while MAS has a daily flight to
Amsterdam.

Mohamad Nor called the pact an "important tool for MAS in
ensuring it optimizes its capability and capacity."

A joint statement by the airlines said they would align their
marketing, sales and distribution services, and explore joint
passenger products and schedules.

The two carriers would also expand joint cargo services,
revenue management, ground handling, engineering and technology
exchange.

The statement said the pact would boost business at Kuala
Lumpur international airport, which has been hit by the
withdrawal of five airlines since it opened in June 1998, and
Amsterdam's Schipol airport.

Van Wijk said KLM would not take up a stake in loss-making MAS
but hinted there could be a possible tie-up between Schipol and
Malaysia Airports which runs the Kuala Lumpur airport.

"I have been told that very good progress has been made and it
is likely a deal could be done," he said.

Malaysia Airports has said it was in talks with Schipol and
other airport operators for a possible tie-up but no deal has
been reached.

Mohamad Nor said MAS was not in talks with any foreign parties
at the moment but "we certainly are looking at all options."

MAS chairman Azizan Zainul Abidin added: "We are not going to
have a fire sale."

The airline has now reported losses for four straight years
and has borrowings totaling 10.34 billion ringgit.

Asked if MAS would join the proposed Wings Alliance, Mohamad
Nor refused to commit and merely said: "We are looking forward to
growing the relationship further (with KLM)."

Van Wijk said the structure of the Wings Alliance was being
finalized, with KLM and Northwest as founding members, and hoped
it could bring in other regional airlines including MAS as its
Asian partner.