Copyright 2000 The Atlanta Constitution
The Atlanta
Journal and Constitution
December 19, 2000, Tuesday, Home Edition
SECTION: Business; Pg. 3D
LENGTH: 363 words
HEADLINE:
Delta steps up as possible partner for DC Air, proposed spinoff of United- US
Airways merger
BYLINE: Nancy Fonti, Staff
SOURCE: CONSTITUTION
BODY:
Delta Air Lines has had talks with DC Air, the new Washington-based carrier
that might sell a minority stake.
Officials at Delta, based in Atlanta,
confirmed the talks but declined to elaborate. A DC Air spokesman wouldn't
confirm the discussions, first reported in The Washington Post. "At this stage
there is nothing substantial in terms of new developments despite the
speculation that is out there," he said.
DC Air is a byproduct of the
proposed United Airlines-US Airways merger announced earlier
this year. The two airlines said they would spin off some US Airways operations
in Washington and create a discount carrier led by Robert Johnson, a US Airways
director and Black Entertainment Television founder.
The plan is aimed
at improving the chances of antitrust approval. The airlines hope for a decision
from the Department of Justice by early next year.
Other airlines have
criticized the spinoff, saying DC Air would remain too closely linked to United,
which would provide it with leased staff and services. To dampen those concerns,
Johnson has said he will consider selling up to 49 percent of DC Air to a
partner that would replace United as the lease provider.
Some airlines
consider a partnership with DC Air attractive because it would control valuable
slots at Reagan National Airport, where the number of takeoffs and landings is
restricted.
Delta Chief Executive Leo Mullin has said Delta is "very
interested" in the Washington routes. Continental Airlines, based in Houston,
has already bid $ 215 million for them.
A new partner for DC Air, be it
Delta, Continental or American Airlines, could correct one of the problems with
the United-US Airways merger proposal, said UBS Warburg analyst Samuel Buttrick.
However, even if DC Air found a fresh investor, Buttrick doesn't think
the deal would pass antitrust review as now structured.
Once DC Air
replaces US Airways, the number of available seats in those markets would drop
by 30 percent, Buttrick said.
"Fixing DC Air corrects one of the more
glaring defects in the merger proposal, but we would be surprised if the DOJ did
not push for additional divestitures," he said.
LOAD-DATE: December 19, 2000 
