(Corrects Bloomberg data in 10th paragraph of story originally published Feb. 13 to show that Lufthansa's stake in JetBlue is 19 percent, not 24 percent.)

Feb. 13 (Bloomberg) -- Air France-KLM Group, Europe's biggest carrier, plans to invest in a combined Delta Air Lines Inc. and Northwest Airlines Corp. in exchange for a board seat, people with knowledge of the matter said.

The size of Air France's potential stake hasn't been set, said the people, who didn't want to be named because the talks are private. Delta and Northwest have briefed pilots on details of a tie-up, which may be announced next week, the people said.

A Delta-Northwest combination would create the world's largest airline and keep the carriers in the 11-member SkyTeam Alliance with Air France. Leo van Wijk, SkyTeam's chairman and the Air France vice chairman, said Jan. 29 his Paris-based carrier would do ``whatever is possible'' to aid the merger.

``There's no downside for Air France in this,'' said Jon Ash, president of Washington-based aviation consulting firm InterVistas-GA2. ``It shows their commitment to the alliance, and it's a good strategic investment.''

Delta and Eagan, Minnesota-based Northwest have agreed on major terms for a tie-up, including keeping Delta's name and Atlanta headquarters and having Delta Chief Executive Officer Richard Anderson run the combined carrier, according to people familiar with the plans.

Spokeswomen Betsy Talton of Delta, Tammy Lee of Northwest, and Veronique Brachet of Air France declined to comment.

Exploring a Role

Executives for Air France and Delta met last month to begin talks about how the European carrier might support a Delta- Northwest merger, a person familiar with the plans said then.

Delta rose 18 cents to $17.71 at 4:19 p.m. in New York Stock Exchange composite trading, while Northwest gained 20 cents to $17.70. Delta shares fell 35 percent in 2007, while Northwest's dropped 41 percent as jet-fuel prices surged 53 percent for the year and eroded industry profits.

Global alliances allow airlines to expand route networks and increase revenue at little cost. The Oneworld Alliance is led by AMR Corp.'s American Airlines and British Airways Plc, while the Star Alliance includes Deutsche Lufthansa AG, UAL Corp.'s United Airlines and US Airways Group Inc.

Germany's Lufthansa this month became the largest investor in U.S. discount carrier JetBlue Airways Corp. Lufthansa invested $300 million to acquire a 19 percent stake in January, or 42.6 million newly issued shares.

U.S. law limits foreign ownership of airlines to 49 percent of equity and a 25 percent voting stake.

Blending Routes

A Delta-Northwest tie-up would blend Delta's trans-Atlantic and Latin routes with Northwest's Pacific system. The combined carrier would have U.S. hubs in New York, Atlanta, Cincinnati, Salt Lake City, Detroit, Minneapolis and Memphis, Tennessee.

Northwest and Delta ``have similar operations,'' Henry Harteveldt, a Forrester Research Inc. analyst in San Francisco, said in an interview. ``They bring different pieces on the international side.''

The briefings for the Northwest and Delta pilot unions on the planned merger allowed the Air Line Pilots Association chapters at each carrier to start talks on how to combine their seniority lists.

Delta and Northwest want union support for the merger, and in exchange may have to provide better pay and work rules, an equity stake or board seat to the pilots, the people said.

Kelly Regus, a spokeswoman for Delta's pilot union, declined to comment. Northwest's union didn't return calls seeking comment.

``If Delta and Northwest can go to their work groups and make them understand that this is the way to a strong future and growth and a reduced likelihood of another bankruptcy, employees are more likely to support it,'' Harteveldt said. ``The rank and file probably understands that a merger is likely going to happen and they are better off supporting it than not.''

Northwest and Delta both filed for bankruptcy on Sept. 14, 2005, and emerged from court protection last year.

The 2005 merger between US Airways and America West Holdings Corp. was the last large combination among U.S. airlines.

To contact the reporters on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net.

Last Updated: February 14, 2008 11:18 EST