- The Washington Times - Friday, July 13, 2001

United Airlines' parent company said yesterday it still wants to purchase US Airways Group Inc. despite statements earlier this month signaling an end to its planned $4.3 billion buyout of the Arlington-based carrier.

UAL Corp., the parent company of United Airlines, said it would await a decision by the Justice Department on its application for a merger before calling off the deal.

"In keeping with its obligations under the merger agreement, UAL Corporation will continue to pursue the transaction during this period and stands ready to address additional questions DOJ [Department of Justice] and the state attorneys general might have," the airline said in a statement yesterday.

United's announcement that it would continue to pursue a US Airways deal also revived hopes for DC Air, a regional carrier the airlines would create to satisfy the antitrust concerns of federal regulators. The Washington-based airline would serve 45 cities in the East and be owned by Black Entertainment Television Chairman Robert Johnson.

"I believe the merger as presented is in the best interests of the flying public and I urge the Justice Department to approve it," Mr. Johnson said in a statement yesterday. "Equally as important, I urge the Bush administration to recognize this unique opportunity to bring about minority ownership in the nation's airline industry in the form of DC Air."

The airline would have about 1,200 employees based in Washington, Mr. Johnson said.

The companies proposed a merger 14 months ago. UAL Corp. announced July 2 that it was discussing with US Airways officials a "possible early termination of its merger agreement."

Transportation Department officials blamed economic and regulatory obstacles for United's plans to end the deal.

US Airways responded by saying it planned to keep the airline intact rather than break it up. The airline also said it still wanted to merge with United.

In separate announcements yesterday, the airlines said the Justice Department decision would determine whether they proceed with a deal. They gave the Justice Department the 21-day advance notice required for a request for a final determination from the agency.

Justice Department approval is required because of antitrust issues involved in large corporate mergers and acquisitions.

US Airways acknowledged the possibility of failure.

"There is no assurance, however, that the transaction can be consummated," the US Airways statement said.

Sen. Arlen Specter, a Pennsylvania Republican, said he believed the Justice Department's earlier concerns about antitrust issues could be overcome.

"It is a fair statement to say that the whole transaction is very much alive," Mr. Specter said.

Mr. Specter's home state also is home to a US Airways hub in Pittsburgh.

"Now, with this change of heart by United, who knows, the whole deal may go through," he said.

Even if the Justice Department approves the deal, the airlines still face internal dissent from their own unions.

The Association of Flight Attendants, the union representing 26,000 United flight attendants and 10,000 from US Airways, said it would strike if a US Airways acquisition threatens their members' job security. They are concerned United would spin off the US Airways airplanes and other assets into regional carriers, thereby bypassing the labor contract requirement to use only union flight attendants.

"This would be a major dispute under the contract, said Dawn Deeks, spokeswoman for the Association of Flight Attendants. "This deal has been flawed from the beginning."

Frank Larkin, International Association of Machinists spokesman, said he was concerned United would cut costs by laying off workers after consolidating assets of the two airlines. The union represents 45,000 United employees and 15,000 for US Airways, most of them mechanics, customer service employees and ramp workers.

"We're going to hold the position that if it isn't good for the members, it isn't a good deal," Mr. Larkin said.

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