- The Washington Times - Friday, October 13, 2000

Shareholders of US Airways yesterday approved the Arlington, Va., carrier's purchase by United Airlines' parent company, bringing the proposed merger one step closer to taking flight.
The $11.6 billion deal still must be approved by federal and European regulators.
More than 98 percent of the shareholders who voted or about 41 million votes approved the proposed merger. The purchase needed a majority of the 67 million shares of common stock outstanding for approval. Only about 619,000 votes opposed the deal.
If the deal goes through, shareholders would get $60 for each share they own. That's a 130 percent premium over the $26.31-per-share closing price May 23, the last trading day before the purchase was announced.
The stock closed at $31.81 on the New York Stock Exchange yesterday.
The merger, if approved, would combine the country's sixth-largest airline with the world's largest airline UAL Corp., the parent of United Airlines.
US Airways' 20 directors and executive officers would walk away with about $280 million collectively not including the extra cash they would receive from employment and severance agreements, long-term incentive plans and retirement benefits.
Stephen M. Wolf, chairman of the Arlington-based airline, owns 3.3 percent of the common stock and would cash out with more than $133 million. Chief Executive Rakesh Gangwal, who has 12.5 million shares, would get nearly $92 million.
The shareholders' approval of the deal also gives the go-ahead for Robert Johnson, founder of Black Entertainment Television and a US Airways board member, to create the spinoff airline, DC Air.
US Airways must sell some of its assets at Ronald Reagan Washington National Airport to eliminate antitrust concerns. US Airways operates 40 percent of all domestic flights from the airport.
Mr. Johnson, who would get about $265,000 from his US Airways stock, plans to spend about $141 million on 222 takeoff and landing slots at Reagan National, giving the new regional carrier flights to 43 markets throughout the country.
Shareholders of Chicago-based UAL Corp. do not have to approve the deal.
Critics of the deal say the newly created DC Air, which US Airways claims will be independent from United Airlines, actually will rely heavily on the monster airline to function, eliminating competition in the Washington market.
Yesterday's vote is just one of the hurdles that needs to be cleared to get the deal under way. It is being scrutinized by regulatory officials.
Mr. Wolf said at the meeting yesterday that US Airways has fulfilled a second request from the Department of Justice for information about the merger and met with Justice officials Wednesday.
Representatives of DC Air are expected to meet with the agency today, he said.
Justice, the Department of Transportation, the Federal Aviation Administration and the European Commission must approve the deal.
Last month, the Senate Commerce, Science and Transportation Committee passed a resolution opposing the plan because the deal would hinder competition, sparking more acquisitions in the industry and deterring the creation of new airlines.
Some states also are investigating the union for fear of stifling competition, which would lead to increased air fares.
Continental Airlines, the nation's fifth-largest airline, has offered to pay $215 million in cash for DC Air. However, the agreement with Mr. Johnson prohibits discussions with other parties regarding the spinoff airline.
Despite regulatory probes, officials at US Airways expect an approval by Jan. 1, according to the company's proxy statement.
Until then, it's business as usual at US Airways, which continues to add regional flights to its schedule, including nonstop service like Jackson, Miss., to Charlotte, N.C., Baton Rouge, La., to Charlotte and Newburgh, N.Y., to Baltimore.
If the merger goes through, the added routes would be taken over by United, a company spokesman said.

Sign up for Daily Newsletters

Manage Newsletters

Copyright © 2021 The Washington Times, LLC. Click here for reprint permission.

Please read our comment policy before commenting.


Click to Read More and View Comments

Click to Hide