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Northwest Airlines weighing future of its cargo business

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MINNEAPOLIS (AP) -- Northwest Airlines is considering what to do with its cargo business after it loses its largest customer, DHL Express, next year.

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Northwest's fleet of 747 freighters makes it the only U.S. carrier with dedicated cargo aircraft.

Chief financial officer Dave Davis told analysts on Tuesday that Northwest's flying for DHL will end late next year.

"It's fairly significant. DHL was our largest cargo customer," he said.

Davis said Northwest may have to shrink the cargo business, which was lagging even without the loss of DHL.

He said selling the business is unlikely to be an option because it relies on Northwest's freedom to fly to additional destinations from its Tokyo hub. That freedom, which only Northwest and United have among U.S. carriers, can't be divided between Northwest and a spun-off cargo operation, he said.

Davis also said Eagan-based Northwest is looking at the possibility of selling its frequent flier program.

"Our hypothesis is that there is possibly substantial value there," he said.

Speculation about airline mergers has been strong. Davis said Northwest is "very actively looking at" who the right partner would be if mergers were to happen.

Some have said airlines should merge soon because they would have a better chance of winning antitrust approval under the Bush administration, which ends in January 2009. Davis said Northwest believes that would depend on the particular merger. He said any merger would have to be begun by February at the latest to have hope of getting approval from antitrust authorities while Bush is still in office.

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Pioneer staff reports
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