United: US Airways deal isn't dead:
May 12 2001 5:30PM, source Rocky Mountain News
Newsletter spawns rumors that both sides will walk away Aug. 1
By Heather Draper, News Staff Writer
United Airlines officials denied reports Friday that the company's proposed $4.3 billion acquisition of US Airways is in trouble.
The reports, which stemmed from an article in USA Today, quoted an internal United newsletter that said 500 employees involved in the US Airways merger would return to their "regular jobs."
United spokesman Andy Plews said the inference that the announcement meant the deal is in jeopardy is "not a correct assumption."
But industry analysts following the deal think the internal announcement is a clear indication that United, Denver's dominant carrier, is worried about it.
"It's a financial Vietnam, and they're gathering on the roof of US Airways with a helicopter right now, trying to get out," said Mike Boyd, president of the Boyd Group of aviation consultants in Evergreen. "It's a marriage made in Chapter 11."
"The whole word on the street in Washington is that it's dead and the parties are going to walk away from it Aug. 1," said Kevin Mitchell, president of the Business Travel Coalition, based in Pennsylvania.
Aug. 1 is the latest deadline for Department of Justice approval of the United-US Airways deal, which United parent company UAL Corp. announced almost a year ago. After Aug. 1, the parties are free to walk away.
"They want out as early as it can be cheaply done," Boyd said. "United has clearly understood for months that this is a financial disaster for them."
The United newsletter said: "The hundreds of employees who have focused on US Airways integration in the past nine months have finished their work -- for now. The teams have completed their planning for days one through 100, the company is prepared, and team members are returning to their regular jobs until United gets closer to day one."
United's Plews said, "There will always be those who want to interpret news like this in a certain way." But, he said, the internal announcement Thursday was meant to "formalize that the mission was fulfilled, that those teams would stand down to a degree because the bulk of their work was done."
UAL Corp. Chief Executive Officer Jim Goodwin said earlier this week that he remains optimistic the merger will be approved by the Justice Department.
David Stempler, president of the Air Travelers Association, said he thinks the internal message doesn't "mean much of anything but that they're dealing with reality. I don't see it as anything but them being financially prudent. What's the point of having (employees) just sitting there and waiting (for merger approval)?"
May 12, 2001