Not surprisingly, the 15-day pilot strike at Northwest Airlines that ended September 12 took a hard toll on the US carrier's third quarter earnings.

Northwest reported a third quarter loss of $223.8 million, compared with a $290.3 million profit for the third quarter a year ago. Revenues were down 31% to $1.93 billion compared with $2.8 billion for the 1997 comparable period.

Northwest president and CEO John Dasburg called the results disappointing, blaming them largely on the strike and labor disruption, but to some extent on continued weakness in Asia.

Although the carrier says operations are back on track, running on time at a rate of nearly 85%, Northwest will post more losses for the fourth quarter and full year because of ongoing contract disputes. Northwest is still in negotiations with unions representing its flight attendants, ground workers and machinists.

The carrier faces external problems as well. The US government has put up a major roadblock to Northwest's proposed alliance with Continental Airlines on Friday as the Department of Justice filed a lawsuit citing the anti-competitiveness of the plan.

Northwest plans to take a 14% equity stake in Continental and gain voting control of the carrier. Northwest as a concession said it would place its voting stake into trust for six years. The merging of the fourth and fifth largest carriers in the US instigated a slew of other alliance attempts among other carriers both within the US and internationally.

'This acquisition would lead to higher ticket prices and worse service for the over 4 million passengers traveling on the routes dominated by the two airlines," said Joel Klein, the department's head of antitrust matters.

Klein also charged that the two carriers were the only competitors on certain routes, which eliminates the benefits provided to consumers when true independent competition is present. Opponents to the merger say it is this competition which drives prices down.

Both Continental and Northwest disagree.

"We are creating a fourth global competitor to compete with the big three airlines and to bring more destinations, more frequencies and better service to consumers. Best of all, we have structured the transaction to ensure Continental's independence and preserve competition between Continental and Northwest," said Jeff Smisek, Continental's general counsel. "We are confident that we will prevail."

Northwest says the alliance will promote strong competition with the Big 3 - United, American and Delta. "These airlines are each about twice the size of either Northwest or Continental; our alliance creates a network of equal size."