- US Airways customers will gain benefits of United’s
global route system
- Combination unites United’s extensive east-west system
with US Airways’
comprehensive north-south routes,
creating first truly efficient nationwide network
- US Airways hubs in Charlotte, Philadelphia and
Pittsburgh to add U.S. and international service and
frequency
- Competition in Washington, DC and other markets will be
maintained and increased due to asset divestiture
- Frequent-flyer programs will be consolidated, offering
passengers more destinations than any other airline program
- No increases to domestic structure fares for two years
following close of merger, except for increases in fuel cost
and CPI
- Travel agents are guaranteed no reduction in domestic
standard base commission rates for two years following close
of merger
Chicago, IL, and Arlington, VA, (May 24, 2000) - UAL Corporation [NYSE: UAL] and
US
Airways Group, Inc. [NYSE: U] today announced that their
boards of directors have approved a definitive merger
agreement pursuant to which US Airways will be acquired by
United in an all-cash transaction valued at $4.3 billion (plus
the assumption of $1.5 billion in net debt and $5.8 billion in
aircraft operating leases).
Structure – Terms
Under the agreement, each share of common stock of US
Airways will be converted into the right to receive $60.00 in
cash in a one-step merger transaction. Based upon US Airways’
closing price of $26.31 on May 23, 2000, this represents a
premium of about 130 percent to US Airways stockholders. The
companies anticipate that the transaction will be completed in
2001. The combination will be accounted for as a purchase
and is anticipated to be accretive to United’s earnings per
share in the second year following the closing.
In recognition of the competitive issues connected with
this transaction, United also plans to divest significant
assets to maintain and enhance airline competition on routes
into and out of Washington, DC. In connection with this
planned divestiture, United and US Airways have entered into a
Memorandum of Understanding with Robert Johnson, under which
Mr. Johnson would buy certain of US Airways’ assets and create
a new airline. This new carrier, to be called DC Air, will be
the first significant new entrant at capacity-controlled
Washington Reagan National Airport in over a decade. United
would retain certain assets at Washington Reagan, including
the US Airways Shuttle service to New York and Boston and the
assets necessary for United to fly to Pittsburgh, Charlotte
and Philadelphia from Washington Reagan.
The Combined Company - Unparalleled Convenience:
The combination of United and US Airways will
deliver significant benefits to millions of passengers and
hundreds of communities throughout the United States. The new
network will make traveling more convenient for passengers,
connecting US Airways’ eastern U.S. markets with
United’s east-west and international networks. It will also
give United passengers easier access to US Airways’ eastern
United States network. Passengers will benefit from the
convenience of one-airline, one-baggage check-in and one
frequent flyer program.
- United will offer "seamless" one-ticket, one-airline
service on over 560 new city pairs – travelers will be able
to fly without the inconvenience of changing airlines. There
will also be fewer check-ins and baggage transfers.
- Many US Airways cities will gain easier access to
international destinations, strengthening their ability to
attract international investment.
- Travelers will be able to combine frequent flyer miles
accumulated in both airline programs into United’s program.
Passengers who now earn frequent flyer miles on two carriers
will be able to consolidate their miles on United. This
offers the opportunity to earn travel awards to more
destinations in more countries than any other airline
program offers.
- Passengers will also benefit from United’s partnership
with Star Alliance member airlines – Air Canada, Air New
Zealand, All Nippon Airways, Ansett Australia, Lufthansa,
SAS, Singapore Airlines, Thai Airways and VARIG. This will
make international travel much simpler, with one-ticket
booking, convenient baggage transfers and easier check-in.
- United passengers will have the convenience of accruing
United frequent flyer miles on the US Airways Shuttle.
Shuttle users will be able to redeem their miles on United’s
unmatched international network.
The Combined Company - Unparalleled Service:
United plans to serve all cities now served by US Airways.
United plans to also offer 64 new daily non-stop flights in
the U.S. and 29 new daily international flights. Passengers
will benefit from more non-stop domestic flights. For
example:
- From Pittsburgh, United plans to introduce the only
daily non-stop service to San Jose, CA and Portland, OR and
add two non-stops a day to Denver.
- From Philadelphia, United plans to offer the only daily
non-stop service to San Jose, CA, Portland, OR and Orange
County, CA.
- From Charlotte, United plans to introduce the only daily
non-stop service to Portland, OR, and San Antonio, TX.
- From Washington Dulles, United plans to introduce the
only daily non-stop service to Orange County, CA.
- From Tampa, United plans to provide the only daily
non-stop service to San Francisco.
Passengers will also benefit from more flights to Europe,
Asia, Latin America and the Caribbean. Some examples of these
flights include:
- From Pittsburgh, United plans to introduce new one-stop
service to significant Asian capitals, such as Beijing,
Tokyo, Seoul and Singapore, as well as to Buenos Aires, Rio
de Janeiro and other Latin American cities.
- From Washington Dulles, United plans to add the only
daily non-stop flights to Copenhagen and Bermuda.
- From Philadelphia, United plans to introduce the only
non-stop service to four international destinations -
Amsterdam, Brussels, Vancouver and Barbados. United also
plans to offer additional daily non-stop service to
Frankfurt, Germany.
- From Charlotte, United plans to provide the only
one-stop service to Melbourne and Sydney, Australia;
Auckland, New Zealand; Taipei, and Seoul and new one-stop
service from Charlotte to Caracas, Rio de Janeiro, Sao
Paulo, Buenos Aires and Santiago.
The transaction will significantly enhance the ability of
US Airways hubs in Pittsburgh, Philadelphia and Charlotte to
grow and compete with other hubs and international gateways,
giving passengers easier access to the West and to
destinations in Latin America, Asia and Europe.
United is committing that it will not increase U.S.
point-to-point structure fares for two years following the
closing of the merger, with exceptions only for increases in
fuel cost and consumer price index (CPI).
United is also committing that for two years following
completion of the merger, travel agents are guaranteed no
reduction in domestic standard base commission rates.
Following the transaction, US Airways’ facilities, routes,
equipment and personnel will operate under the United Airlines
name. The combined company would have approximately
145,000
employees worldwide. This combination would create a global
airline with revenue in excess of $25 billion.
James E. Goodwin, chairman and chief executive officer of
UAL Corporation, said, "This combination provides significant
benefits to the communities and customers served by both
companies. The addition of US Airways will greatly improve
United’s ability to serve customers in the East and to open
its worldwide network to them. Similarly, the combination
creates more travel options and convenience for Star Alliance
passengers who travel to the cities US Airways serves. As the
first carrier with a strong presence across the U.S., United
will be positioned to provide a competitive challenge in new
areas. We have the financial strength and unencumbered assets
to continue to grow the company."
Mr. Goodwin continued, "For the passenger and cargo
customers of United, this merger will fill a geographic void
along the East coast and offers new reach to the East and
Southeast. It also will provide new competition to others
currently serving those regions. US Airways’ system will allow
United to serve Trans-Atlantic, Latin American and Caribbean
routes more effectively, intensifying competition in those
markets, and will improve our ability to reach Asian
destinations from across the U.S. This combination will also
allow us to enhance our code-sharing alliance, with our Star
Alliance partners, particularly across the Atlantic, making
use of US Airways’ Pittsburgh, Philadelphia and Charlotte
hubs. Together, we will be able to upgrade service and access
to the world for our customers. Our customers will be linked
to a system that will directly carry them to the commercial
centers of the world. In short, United and US Airways together
will create a more efficient global airline network that can
improve the quality of service for its customers.
"We welcome the US Airways employees who will be joining
the United family. Both United and US Airways employees are
known for their commitment to service and professionalism. We
look forward to offering them additional opportunity in the
combined company. In addition, United intends to honor all
union contracts, and this transaction will not result in any
furloughs of United or US Airways employees," Mr. Goodwin
added.
Stephen M. Wolf, chairman of US Airways Group, Inc., said,
"The agreement we are announcing today, in which United and US
Airways will merge, is a milestone in aviation history,
melding the route systems and assets of two proud and
successful carriers into this nation’s and the world’s largest
and most comprehensive airline network. During the past four
years, working closely with the 40,000 dedicated employees at
US Airways, we have made enormous strides toward achieving our
aim of becoming the carrier of choice. Today we have the
opportunity to achieve our goal of becoming a world-class
global carrier in a single stroke.
"By joining US Airways with United, we deliver value for
our stockholders, provide dramatically improved global service
for customers and achieve long-term security and career
opportunities for US Airways’ employees. This is the right
combination, the right partner, the right time and the right
step for our customers, communities, shareholders and our
employees," Mr. Wolf added.
Memorandum of Understanding to Divest Assets to Create a
New Carrier
United proposes to address potential competitive issues
related to the transaction in Washington DC by divesting
sufficient assets to create another airline to compete in
numerous routes currently served by US Airways in the
Washington, DC area. In connection with this planned
divestiture, United and US Airways have entered into a
Memorandum of Understanding under which Robert Johnson would
buy certain assets and create a new carrier to be called DC
Air. This divestiture of assets will ensure that competition
is maintained and enhanced and further consumer benefits will
result from the merger.
The sale would include most of US Airways’ assets and route
structure operating from Washington Reagan National Airport.
These assets would create a base of operations for the new
carrier out of Washington Reagan.
Mr. Johnson is the founder, chairman and chief executive
officer of BET Holdings II, Inc., and a member of the US
Airways Board.
Dividend
The transaction is not expected to affect United’s recently
instituted annual dividend of
$1.25 per share of common
stock.
Approvals
The merger is conditioned upon, among other things, the
approvals of US Airways stockholders, regulatory clearance and
other customary closing conditions.
Merrill Lynch & Co. acted as financial advisor and
provided a fairness opinion to United. Cravath, Swaine &
Moore and Kirkland & Ellis (for antitrust matters) acted
as legal counsel to United. Salomon Smith Barney acted as
financial advisor and provided a fairness opinion to US
Airways. Skadden, Arps, Slate, Meagher & Flom and
O’Melveny & Myers (for antitrust matters) acted as legal
counsel to US Airways.
About US Airways
US Airways, the US Airways Express carriers, US Airways
Shuttle, and low-fare MetroJet fly to 205 destinations
worldwide, including 38 states in the U.S., Bermuda, Cancun,
Grand Cayman, Montego Bay, Nassau, San Juan, St. Thomas, St.
Maarten, St. Croix, and the Canadian destinations of Toronto,
Montreal, Ottawa, Hamilton, and London, Ontario. US Airways’
transatlantic destinations include Frankfurt, London, Madrid,
Munich, Paris and Rome. US Airways’ Internet address is
www.usairways.com
About United Airlines
United Airlines is the largest air carrier in the world,
offering more than 2,330 flights a day to 139 destinations in
26 countries and two U.S. territories. It is an industry
innovator with breakthroughs such as Economy Plus seating,
E-Ticket Service, Airport Gate Readers, Mobile Airport
ChariotsSM, United Shuttle, and the introduction of
the technologically advanced Boeing 777. United Airlines’
Internet address is www.ual.com.
Safe Harbor Statement under the Private Securities
Litigation Reform Act of 1995: This press release contains
certain "forward-looking" statements within the meaning of the
Private Securities Litigation Reform Act of 1995. These
statements are based on management’s current expectations and
are naturally subject to uncertainty and changes in
circumstances. Actual results may vary materially from the
expectations contained herein. The forward-looking statements
contained herein include statements about future financial and
operating results and benefits of the pending merger between
United and US Airways. Factors that could cause actual results
to differ materially from those described herein include:
industry capacity decisions; the airline pricing environment;
competitors’ route decisions; the inability to obtain
regulatory approvals; actions of the U.S., foreign and local
governments; domestic and international travel patterns; the
inability to successfully integrate the businesses of United
and US Airways; costs related to the merger; the inability to
achieve cost cutting synergies resulting from the merger;
labor integration issues; the economic environment of the
airline industry and the general economic environment. More
detailed information about these factors is set forth in the
reports filed by United and US Airways with the Securities and
Exchange Commission. Neither United nor US Airways is under
any obligation to (and expressly disclaims any such obligation
to) update or alter its forward-looking statements, whether as
a result of new information, future events or otherwise.
In connection with merger, US Airways will be filing a
proxy statement with the Securities and Exchange Commission.
STOCKHOLDERS OF US AIRWAYS ARE URGED TO READ THE PROXY
STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT WILL CONTAIN
IMPORTANT INFORMATION. Investors and security holders may
obtain a free copy of the proxy statement when it becomes
available and other documents filed by United Airlines and US
Airways with the Securities and Exchange Commission in
connection with the merger at the Securities and Exchange
Commission’s web site at www.sec.gov.
Stockholders of US Airways may also obtain for free the proxy
statement and other documents filed by US Airways in
connection with the merger by directing a request to: US
Airways, 2345 Crystal Drive, Arlington, Virginia 22227,
Attention: Kimberly Holland, Investor Relations,
Telephone:
(703) 872-5009, email:
kimberly_holland@usairways.com. Stockholders of US Airways may
also obtain for free documents filed by United in connection
with the merger by directing a request to: United Airlines,
1200 East Algonquine Road, Elk Grove Village, Illinois 60007,
Attention: Patty Chaplinski, Investor Relations, Telephone:
(847) 700-7501, email: patty.chaplinski@ual.com.
US Airways and its directors and executive officers may be
deemed to be participants in the solicitation of proxies from
US Airways stockholders in favor of the merger. These
directors and executive officers include the following: N.
Bruce Ashby, Mathias J. DeVito, Rakesh Gangwal, Peter M.
George, Robert L. Johnson, Robert LeBuhn, John G. Medlin, Jr.,
Hanne M. Merriman, Thomas A. Mutryn, Thomas H. O’Brien,
Lawrence M. Nagin, Hilda Ochoa-Brillembourg, Richard B.
Priory, Raymond W. Smith, Stephen M. Wolf. Collectively, as of
January 31, 2000, the directors and executive officers of US
Airways may be deemed to beneficially own approximately
6.6% of the outstanding shares of US Airways common
stock. Stockholders of US Airways may obtain additional
information regarding the interests of the participants by
reading the proxy statement when it becomes available.
United and certain of its directors and executive officers
may also be deemed to be participants in the solicitation of
proxies from US Airways stockholders in favor of the merger.
These directors and executive officers include: Christopher
Bowers, Frederic F. Brace, Rono J. Dutta, James E. Goodwin,
Douglas A. Hacker, Francesca M. Maher, Peter McDonald, Andrew
Studdert and Daniel Walsh. As of the date of this
communication, United, Mr. Brace, Mr. Dutta, Mr. Goodwin, Mr.
Hacker and Ms. Maher do not beneficially own any shares of US
Airways common stock.
Press Conference
Note to Editors: You are cordially invited to
participate in the United / US Airways press conference on
Wednesday, May 24, 2000 at 12:30 pm (EDT) at the
Waldorf-Astoria Hotel in New York City, located on 301 Park
Avenue (between 49th & 50th
streets), at the Starlight Roof (18th floor). If you are
unable to attend, you can participate by dialing
1-888-732-8927 (within the United States) and 1-212-676-5227
(internationally).
Live Satellite Feed for United and US Airways Press
Conference:
Wednesday, May 24, 2000
12:30 – 1:30 PM (EDT)
Telstar
6; Transponder 25
Downlink frequency: 12144 on the
vertical
If you have any technical questions or problems with live
satellite feed, please call Mark Sofer at (917) 273-3057 or
(917) 273-4712.
Satellite Uplink for United and US Airways B-Roll:
Wednesday, May 24, 2000 Wednesday, May 24, 2000
8:00 AM
– 8:30 AM (EDT) 2:00 PM – 2:30 PM (EDT)
GE2; Transponder 6
GE2; Transponder 18
Downlink frequency: 3820 Downlink
frequency: 4060
If you have any technical questions or problems with the
B-Roll satellite feeds, please call Quicklink at (212)
564-4831.
Today’s news release, along with other news about United
and US Airways, is available on the Internet at http://www.ual.com/ and http://www.usairways.com/.
Contacts for United
Airlines |
Contacts for US
Airways |
For Media |
For Media |
Andy Plews |
Richard Weintraub |
847-700-5538
(day) |
703-872-5100 |
847-700-4088 (evening /
weekend) |
|
|
|
For Investors |
For
Investors |
Patty
Chaplinski |
Kimberly Holland |
847-700-7501 |
703-872-5009 |
Copyright © 2000, US Airways,
Inc.
All Rights
Reserved