- The Washington Times - Thursday, May 25, 2000

Robert L. Johnson said yesterday that he has a proven track record when it comes to successful start-ups and his latest venture into the airline business will be no exception.

The chairman and chief executive officer of BET Holdings II has agreed to buy part of US Airways Group Inc.'s assets at Ronald Reagan Washington National Airport and turn his new company, DC Air, into a competitive force in the industry.

"I know how to create value," Mr. Johnson said during a teleconference yesterday while waiting at La Guardia Airport to fly back to Washington. "I can run this airline very successfully."

US Airways needs to sell its Washington operations to ease regulatory concerns over the company's proposed acquisition by United Airlines parent UAL Corp.

Mr. Johnson, a director at US Airways, plans to buy departure and landing slots, routes, equipment and other assets from the airline. He'll actually lease planes, pilots, flight attendants and crew members from United, giving the airline about 1,000 employees.

The new minority-owned-and-operated airline will serve 44 cities with 122 departures daily from Reagan National. DC Air will serve about 3 million people and have gross revenues of about $500 million, he said.

Mr. Johnson, who will become the chairman, chief executive and sole owner of DC Air, would not disclose the cost of the assets because the value of the leases has not yet been determined.

"I'm more than capable of financing this transaction out of my own assets," he said.

The deal is separate from BET and will not affect that company's operations, Mr. Johnson said.

Terry Trippler, an airline expert at 1travel.com, does not approve of how the board of directors from both companies decided who would get the assets.

"They have determined who is going to compete with them," Mr. Trippler said. "That is arrogant."

Mr. Trippler said he did not find anything wrong with the proposed acquisition except for the creation of this new airline.

"This is a joke," he said. "They are very, very smart, though. If anyone challenges them, they can throw the race card out."

Officials from the U.S. Department of Justice could not be reached for comment.

Mr. Johnson had been on the US Airways board of directors since 1998 and owned 2,251 shares of common stock as of Jan. 31, according to the company's latest proxy statement filed with the U.S. Securities and Exchange Commission. According to the proxy, nonemployee directors get a retainer fee of $22,000 and a meeting fee of $1,000.

"I'm extremely pleased that Bob is reaching out in a nontraditional existing role for African-American businessmen," said Nathan A. Chapman Jr., president of Chapman Co., an investment bank and brokerage in Baltimore. "He's an excellent manager and his skills are uniquely applicable."

Mr. Johnson, who founded the Black Entertainment Television network in 1980, has built his company into a billion-dollar media conglomerate targeting blacks in all forms of entertainment from television and movies to books, magazines, restaurants, clothing and the Web.

He took BET public in November 1991, only to buy it back seven years later with the help of Liberty Media Group for an estimated $378 million.

Industry officials agree that it is difficult to create a new airline and turn it into a profitable business while competing in the tight market.

"Starting up an airline is one thing; having it succeed is another," Mr. Trippler said.

Small regional airlines such as Denver-based Frontier Airlines Inc. and Orlando-based AirTran Airlines are flying high. But companies such as Access Air, based out of Des Moines, Iowa, and Eastwind Airlines, in West Trenton, N.J., have figuratively crashed and burned.

Mr. Trippler, however, is convinced that Mr. Johnson will have a much easier time making DC Air work since he will be getting help from both US Airways and United.

"If you're going to create a startup, then you compete like everyone else," Mr. Trippler said. "The slots should not be theirs to sell."

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