Copyright 2000 The Washington Post
The Washington
Post
July 21, 2000, Friday, Final Edition
SECTION: FINANCIAL; Pg. E03
LENGTH: 799 words
HEADLINE:
United-US Airways Deal Backed by Pa. Politicians
BYLINE: Frank Swoboda , Washington Post Staff Writer
BODY:
United Airlines'
proposed merger with US Airways yesterday won the support of
several Pennsylvania politicians, including the chairman of the House
Transportation Committee, after the airlines pledged to maintain and expand
their operations throughout the state.
United Chairman James Goodwin
announced the airline will spend $ 160 million to expand US Airways'
aircraft-maintenance facilities at Pittsburgh. He pledged to keep US Airways'
current reservations center in Pittsburgh and said United will maintain US
Airways' airport hub operations at both Pittsburgh and Philadelphia.
Rep. Bud Shuster, the Republican chairman of the Transportation
Committee, called the United merger a "godsend" for Pennsylvania and said
United's announcement yesterday basically eliminated any reservations he might
have had. Shuster said the merger would help sustain Pennsylvania's economic
recovery, something the state wouldn't be able to count on if US Airways
remained a separate company. "In the long run," Shuster said, "US Airways five
years from now would be in big trouble [financially]."
Sen. Rick
Santorum (R-Pa.) and Rep. Ron Klink, his Democratic rival in the November
elections, both appeared at a news conference yesterday to pledge their support
for the merger. Republican Gov. Tom Ridge, who has been mentioned as a possible
vice-presidential running mate for Texas Gov. George W. Bush, sent an envoy to
the news conference to promise his backing. Also endorsing the deal were members
of Congress from western Pennsylvania, where US Airways is the biggest private
employer.
"Today I'm ready to announce I support this merger. You have
removed a major obstacle to this merger," said Democratic Rep. Frank R. Mascara,
referring to United's decision to keep US Airways' operations in the region
intact.
The two airlines have been working hard to build political
support for their merger--the biggest in U.S. airline history. Antitrust
regulators in the Justice Department are examining the combination, which
critics say would inhibit competition and trigger a new round of industry
consolidation.
US Airways is already paying to become the official
airline of the Republican National Convention, which opens July 31 in
Philadelphia. Asked how much it paid for that title, US Airways Chairman Stephen
M. Wolf would say only: "Something north of a dollar and south of a very big
number."
United is the official airline of the Democratic National
Convention next month in Los Angeles.
Shuster, whose term as chairman of
the Transportation Committee will be up at the end of this year, said the
government has to look at each merger on its own merits. But in the end, he
wondered out loud whether consolidation down to three major airlines was really
that bad for consumers. Noting that everyone was already complaining about
competition with six airlines, he said maybe consumers would benefit from having
"the three big boys beating each other's brains out."
American and
Delta, the nation's second- and third-largest airlines, respectively, are
already lining up merger targets of their own. American wants Northwest
Airlines, and Delta has its sights on Continental.
United offered $ 11.6
billion for Arlington-based US Airways in May, $ 4.3 billion in cash and the
rest in assumed debt and lease payments.
Last weekend the Justice
Department's antitrust division asked the two airlines for more information on
the merger. The airlines have as much time as they want to respond to the
government's latest request, but Goodwin said after yesterday's news conference
that he hoped to provide the information no later than the end of August.
United hopes to win government approval for the merger before the
Clinton administration leaves office in January.
Goodwin said the
decision to keep a major hub in Philadelphia, just 100 miles from the Washington
area, would have no impact on United's new hub operation at Dulles International
Airport. Goodwin noted that United had just committed to support a new $ 750
million terminal as part of a new expansion at the Dulles.
As part of
the merger deal, United is selling all but US Airways' Washington-New
York-Boston shuttle operations and a handful of other routes at Reagan National
Airport to a new airline, DC Air, which will be headed by Black Entertainment
Television Chairman Robert L. Johnson. The move is designed to address concerns
antitrust regulators may have that United, which is dominant at Dulles, would
also gain dominance at National by acquiring US Airways.
That sale was
good enough for Shuster. The influential committee chairman said the sale of the
routes to DC Air, which would be the only major minority-owned airline, "solves
one of the biggest antitrust stumbling blocks."
LOAD-DATE: July 21, 2000 
