Airlines industry is morphing: Partnerships flourish

Northwest Airlines Corp (NWA.N) said on Wednesday it would cut its frontline and management staff by 8 percent as part of a sweeping capacity reduction aimed at offsetting the soaring cost of jet fuel.

Northwest, which plans to merge with Delta Air Lines Inc (DAL.N), estimated the job cuts and a variety of new fees would generate $250 million to $300 million annually.

Southwest Airlines Co., the largest U.S. discounter, and Canada's WestJet Airlines Ltd. agreed to form an alliance by late 2009, giving the carriers access to routes outside their home markets.

Southwest, which only flies in the lower 48 states, would be able to book customers on WestJet flights to Hawaii, Mexico and the Caribbean and for ski trips in Canada through Calgary or Vancouver. The deal also advances WestJet's goal of expanding in the U.S. WestJet rose the most in more than three years in Toronto trading.

``This gives WestJet exactly what they need in terms of growing their trans-border flights,'' said Chris Murray, an analyst at CIBC World Markets in Toronto, who rates WestJet ``market outperform.'' ``The deal would make sense for Southwest to build its service into Canada, too.''

Travelers will be able to purchase seats on WestJet flights through Southwest's Web site before the codeshare agreement takes effect.