Mls515 From United States of America, joined Jun 2000, 3069 posts, RR: 9 Posted (12 years 7 months 2 weeks 3 days 6 hours ago) and read 1127 times:
The plot thickens:
How will this affect the US/UA merger?
Continental Seeks D.C. Air Assets
By MARK BABINECK
Associated Press Writer
HOUSTON (AP) -- Continental Airlines is making a play for the Washington, D.C., assets of U.S. Airways, saying the rival airline's plan to sell them to cable executive Robert Johnson to satisfy regulatory concerns over its proposed acquisition by UAL Corp. (NYSE:UAL - news) is anticompetitive.
Continental first tendered its $215 million offer for the assets being sold to startup DC Air on Oct. 2, when chairman and chief executive officer Gordon Bethune formally bid for US Airways' 119 jet slots and 103 commuter, short-haul slots at Ronald Reagan National Airport.
Bethune followed with another letter Monday, saying he was ``disappointed'' that Continental had not heard back from either US Airways or UAL's United Airlines, whose proposed $4.3 billion acquisition offer is causing US Airways to sell its presence at Reagan National.
``A sale of the DC Air assets to a strong and well funded competitor like Continental Airlines ... would provide sustainable competition and real benefits to consumers,'' Bethune wrote in Monday's letter. ``This should be the objective of United and US Airways as part of your divestiture strategy, and certainly of the regulatory bodies reviewing your transaction.''
The Houston-based Continental notes its offer comes at a 50 percent premium over the $141 million price offered by Johnson, chairman and chief executive of online entertainment company BET.com LLC and a US Airways board member.
United spokeswoman Susana Leyva said airline competition can thrive in Washington without Continental's help.
``At United, we recognized from the beginning when we announced the merger the need to maintain enhanced competition in Washington, D.C., by divesting at Reagan National,'' Leyva said from her Washington office. ``The creation of DC Air at National is an important benefit provided by the acquisition.''
US Airways did not immediately return telephone messages Monday afternoon. Through his secretary, Johnson declined to comment.
Testifying before Congress earlier this year, Johnson promised that his startup airline would be ``a viable and totally independent competitor from day one.'' However, DC Air would rely on United and US Airways for some of its equipment and employees and would lease its jets.
The deal already faces intense regulatory scrutiny from regulators, who are worried that the combination of the Elk Grove Township, Ill.-based United, the world's largest airline, and the Arlington, Va.-based US Airways, the nation's sixth-largest airline, would restrict competition and lead to higher prices. They are also worried that United, the dominant carrier at Dulles Airport near Washington, would have too much control over the local market if it acquires US Airways' assets at Reagan National.
In his letter Monday, Bethune said Continental's offer guarantees competition to from Reagan National on service to Philadelphia, New York, Boston, Pittsburgh and Charlotte, N.C.
Selling those routes to Johnson is practically like not selling them at all, Bethune argued.
``While we have the utmost respect for Mr. Johnson's success in the entertainment business, he has no expertise in the airline business,'' Bethune wrote. ``DC Air will be totally dependent on United Air Lines to operate the business for it, thus bringing no real competition to this crucial market.''
Both of Bethune's letters were addressed to US Airways president and CEO Rakesh Gangwal and UAL chairman and CEO James Goodwin.
US Airways' shareholders are expected to vote on the merger at their meeting Thursday.
Shares of US Airways were unchanged at $31.48, while shares of UAL were down $1.13 to $41.25, both on the New York Stock Exchange. Shares of Continental fell $1.88 to $46.13, also on the NYSE.
ContinentalEWR From United States of America, joined May 2000, 3762 posts, RR: 15 Reply 2, posted (12 years 7 months 2 weeks 3 days 3 hours ago) and read 1052 times:
The won't bother with Metrojet. It's junk and besides
Continental tried and failed miserably to start an air-
line within an airline in 1993 with Continental Lite.
The venture failed to capture market share and cost
Continental $350 million, which Bethune had to write
off as one of his first decisions upon assuming role of
In my honest opinion, United will not be allowed to
buy US Airways Inc. as the DOJ will probably see it
for what it really is, a valiant attempt by the biggest
airline in the world to dominate every market in the
US. United has turned into a customer service night-
mare and has alienated thousands of customers not
to mention scores of corporate clients. Merging two
very different airlines will produce even greater
headaches and logistical bottlenecks the kind which
the DOJ is keen to avoid.
Having said that, Continental bidding for DC Air's
assets is a smart move and a major threat to DAL's
position on the East Coast and if successful, would
represent a major blow to American Airlines' plans
to build up market share in the East as well.
CNBC From , joined Dec 1969, posts, RR: Reply 5, posted (12 years 7 months 2 weeks 3 days 2 hours ago) and read 1018 times:
I kept hearing that American was considering making a counter offer to buy US Airways soon after United put its bid in (of course that never happened). I'm really hoping they will place a counter offer here because American really does have no real presence in the Northeast.
They are the number one operator in Boston in terms of flights per day but more than half of those flights are American Eagle.
They are strong in New York LGA and JFK but not strong enough. When are they going to develop a full-fledged Northeast hub. If they aren't going to do it, they might as well have mini-hubs in all the Northeast cities by adding DC Air into their mix. Then they would strong in Boston, New York, and Washington.
I know American is building a new 56 gate terminal at JFK but how are they going to get the routes to fill this terminal. I don't understand what American is trying to do.
I just hope that American can steal DC Air away from Continenatal. Continental already has a huge hub in Newark. Share the wealth Continental.
Pbb152 From United States of America, joined Feb 2000, 594 posts, RR: 1 Reply 6, posted (12 years 7 months 2 weeks 2 days 23 hours ago) and read 981 times:
Hey CNBC, when AA decides to share the wealth at Heathrow, maybe CO will share the wealth in the NE. Seriously, CO is just exposing this D.C. Air deal for the scam that it is. They (D.C. Air) will basically just be a subsidiary of UA. I mean they will be leasing planes from UA, have the same FF program as UA, probably be a member of STAR Alliance. What a joke! IF UA doesn't accept CO's offer (if the merger goes through, which it won't) which is signifigantly higher, then that certainly exposes some sort of B.S. going on. Who ever heard of a company accepting the lowest offer for assets? I think the bigwigs at UA think the folks at the DOJ are a bunch of morons. UA's tactics are so transparent it's ridiculous.
Either way, this is a brilliant move by CO. On the one hand, the DOJ will first oversee the divestiture of assets at DCA. Certainly if UA was to not accept a higher offer from CO, the DOJ would recognize the D.C Air scam which would put the whole merger in more jeopardy than it already is. On the other hand, if UA agrees to the deal with CO and the merger does in fact go through, then CO is the proud owner of about 230 of the most valuable slots in the nation which will only help to strengthen their presence in the NE. Either way, CO does not lose. Bethune pulls another brilliant move!
DCA-ROCguy From United States of America, joined Apr 2000, 4402 posts, RR: 37 Reply 7, posted (12 years 7 months 2 weeks 2 days 22 hours ago) and read 976 times:
Preach it Pete! Bethune has thrown one more monkey wrench into UA-US plans to reduce competition and drive up fare profit margins beyond reason in medium-sized and small cities. That's *all* this merger is about.
In addition, Bethune could make a good case that he'd offer better service on the routes at DCA than DC Air would. UA-US are ceding Johnson ten--count 'em ten--worn out 732s, plus a couple score RJ's and DH7's, to run US's DCA schedule. Even minus the shuttles and CLT, PIT, ORD, PHL that's nowhere near enough to maintain the jet service US now offers to many cities from DCA, including ROC, BUF, SYR, ALB, GSO, and others. You and others are right: Goodwin obviously thinks DOJ are morons.
CO, as we know, is loaded with spanking new Next Gen 737s, and ERJs. I can't imagine Bethune would take the junkheap of planes UA/US are ceding (OK CRJ's are nice new planes but CO doesn't fly them) to run those routes. He'd have much better equipment to offer, in keeping with Continental's quality philosophy.
As y'all have said, US-UA want a dependent puppet at DCA not a big major competitor. Hee hee hee....they must be squirming in the paneled offices in Arlington and Elk Grove. Go Bethune!!