Copyright 2000 P.G. Publishing Co.
Pittsburgh
Post-Gazette
June 14, 2000, Wednesday, SOONER EDITION
SECTION: BUSINESS, Pg. C-1
LENGTH: 727 words
HEADLINE:
AIRLINES PAY VISIT TO HOUSE;
CHIEF EXECS DEFEND MERGER OF UNITED, US AIRWAYS
BYLINE: JACK TORRY, POST-GAZETTE NATIONAL BUREAU
DATELINE: WASHINGTON
BODY:
Facing a steady stream of skeptical questions from House lawmakers,
the chief executive officers of United Air Lines and US Airways
asserted yesterday that their proposed merger would be a
"win-win" for consumers and that the new company would be the "first major
airline of the 21st century."
In their first public testimony since
United agreed to buy US Airways last month, United Chairman James Goodwin and US
Airways Chairman Stephen Wolf dismissed fears that the new airline giant would
lead to higher prices or force competitors such as American Airlines or Delta
Air Lines to seek similar mergers.
"I don't know if you'll see a flock
of mergers," Goodwin told the House Transportation Committee.
Hailing
United's $ 11.6 billion purchase of his company as a "milestone in commercial
aviation," Wolf said the expanded new company would "create the nation's and
world's most efficient and comprehensive route network. ... In brief: This is
the right step with the right partner at the right time." But while gaining the
apparent backing of Pennsylvania Rep. Bud Shuster, R-Everett, the House
Transportation Committee chairman, they were greeted with a barrage of barbed
comments and pointed questions suggesting that Republicans and Democrats are
uneasy about the proposed marriage.
"I think this is a 'win-win' for
you, your stockholders and half the lobbyists in Washington," said Rep. Ray
LaHood, R-Ill. "But I don't think this will necessarily be a 'win-win' for
customers. In fact, I think it's a 'lose-lose.' If there were a vote by
Congress, this probably wouldn't go through."
Rep. James Oberstar,
D-Minn., the panel's ranking Democrat, predicted that the "end result" would be
fewer airlines and poorer service
The Justice Department, which must
approve the merger, has yet to indicate whether it will oppose the deal. Deputy
Attorney General John Nannes of the department's antitrust division said in
prepared remarks that Justice would "take appropriate enforcement action" if it
decides "air carrier mergers threaten to deprive consumers of competitive air
service."
The Justice Department filed suit in 1998 to block a proposed
merger between Northwest Airlines and Continental Airlines, the nation's fourth-
and fifth-largest carriers. The government charged that the merger would lead to
higher prices and lower-quality service. The case will go to trial this year.
Goodwin and Wolf were joined yesterday by Robert L. Johnson, chairman of
the proposed new DC Air. As part of an effort to avoid antitrust difficulties,
United and US Airways would lease the start-up jets that it would then fly out
of Washington's Reagan National Airport to 43 cities, including two daily
flights to Pittsburgh.
Complaining that critics had characterized
formation of DC Air a "sweetheart deal," Johnson said he was "putting up $ 200
million for this 'sweetheart.' That's a pretty expensive 'sweetheart.' "
If the government approves, United -- the nation's largest airline and
the dominant carrier on the West Coast -- would emerge as a super airline,
blending itself with US Airways, the sixth-largest and the dominant player on
the East Coast.
The new company would have 146,000 employees and annual
revenues of $ 26.7 billion. It would control eight major hubs and operate 6,500
daily flights. By comparison, American Airlines, the second-largest carrier,
operates 3,600 daily flights.
Shuster plans a second hearing tomorrow,
while a Senate subcommittee and the House Judiciary Committee today will
simultaneously hold their own hearings into the merger and airline competition.
Shuster has been receptive to the proposed merger, expressing fears
yesterday that "if nothing happens, it is my judgment that we will see US
Airways in bankruptcy -- if not out of business -- in the coming years."
US Airways is currently the largest private employer in Pittsburgh, with
11,700 workers. Although United has pledged to local officials that it will not
slash jobs in Pittsburgh, executives of the airline have yet to commit to going
ahead with a state-of-the-art maintenance facility at Pittsburgh International
Airport.
During questioning by Pennsylvania Rep. Frank Mascara,
D-Charleroi, Goodwin said United would make public within the next four weeks an
answer regarding the future of the maintenance facility.
LOAD-DATE: June 14, 2000 
