Alcazar

Since the 1944 signing of the Convention on International Civil Aviation, international aviation was based on bilateral air transport agreements, in which government would negotiate the rights of one or more flag carriers to operate routes between the countries. The negotiations focused on retaining each country's flag carrier's market share and also effectively hindered any airline from not being domestically owned—either by the government or by private investors. In 1992, the United States started negotiating open skies agreements with the European Union (EU), which would allow any European airline to fly from any airport in their home country to any airport in the US, and similarly any US airline to fly from any US airport to any European airport.

In the 1980s, SAS, Swissair, Austrian Airlines, and Finnair had attempted to establish European Quality Alliance (EQA). In addition to codesharing and joint marketing, the alliance was largely based around technical issues and using the EQA brand as a "seal of quality". These had largely stranded because Finnair felt that SAS goal was to use Finnair as a feeder airline to SAS' hub at Copenhagen Airport. There had also been previous discussions between SAS and Swissair, and SAS and KLM for mergers, without success. In 1992, Swissair and Austrian Airlines had established the common frequent-flyer program Qualiflyer.

In 1988, SAS had bought 18.4% of Texas Air Corporation, the holding company which owned Continental Airlines. The two airlines had started a strategic cooperation, such as SAS moving its New York services from John F. Kennedy International Airport to Newark Liberty International Airport. KLM was cooperating with British Airways, Virgin Atlantic, and Sabena. In addition, they had a strong tie with Northwest Airlines. In 1989, KLM bought 20% of the then-ailing Northwest. In 1992, KLM had made a bailout purchase of Northwest, securing a 25% ownership of the airline, which is the maximum a foreign airline is allowed to own in a US airline. Swissair cooperated with Delta Air Lines and Singapore Airlines in a triangular cooperation, which was highly valued by the company's management. Delta was significantly larger than the other two US partner airlines, and had a base in New York City, rather than Northwest's hubs at Detroit Metropolitan Wayne County Airport and Minneapolis–Saint Paul International Airport. Austrian Airlines lacked a US partner.

In Europe, the European Commission (EC) was working on plans to deregulate the aviation market, similar to the US Airline Deregulation Act of 1978. The Commission received support from the Netherlands and the United Kingdom, while most other countries and the International Air Transport Association (IATA) were opposed to deregulation. In 1991, the Gulf War broke out. The price of oil escalated, while the demand for business travel diminished. After a 1992 Swiss referendum rejected Swiss membership in the European Economic Area, Swissair was concerned they would not be able to have access to the European market. With its small home market, it was dependent on international partners to feed its hub.