Updated 02:37 PM EST, Apr-24-2001
UAL, US Airways: Deal unlikely to close soon
by Charles Sisk
Posted 02:12 PM EST, Feb-6-2001
UAL Corp. and US Airways Group Inc. executives said April 18 they do not expect to close their merger before the end of June, as government regulators still are not prepared to sign off on the deal. The merger has an Aug. 1 termination date.
Antitrust officials are believed to be most concerned about the deal's impact on competition along the Eastern seaboard. Also opposing the deal are two of United's biggest unions: the International Association of Machinists and Aerospace Workers and the Association of Flight Attendants.
In conference calls last week, executives at both companies declined to discuss contingency plans should they fail to win government approval. To alleviate antitrust concerns, UAL plans to sell off much of US Air's Washington operations to Robert Johnson, a media entrepreneur who plans to create an airline called DC Air. UAL plans to sell another 20% of US Airways—including half of US Air's Boston-New York-Washington shuttle route—to AMR Corp. AMR has also said it will buy a 49% stake in DC Air.
UAL also agreed March 2 to sell three of US Airways' regional carriers to Dulles, Va.-based Atlantic Coast Airlines Holdings Inc. Although the three operate along the East Coast, UAL is jettisoning these carriers to avoid an increase in wage expenses.
UAL, the Chicago-based parent of United Airlines, announced May 23, 2000 it would buy Arlington, Va.-based US Airways for $60 per share in cash. The deal is valued at $12.3 billion, including $1.7 billion in assumed debt and $6.3 billion in assumed aircraft operating leases.
I still believe that the Merger will be approved. That is a good way of allowing United to compete with American Airlines. Competition between two giants at least. What do you guys think?