Whatever respect I had for United Airlines is now gone. I might as well throw in US Airways while I am at it. I'll pray the gov't says no way..which I doubt will happen. Walter DCA ----- Original Message ----- From: "W Wilson" <wlw-jr@att.net> To: <AIRLINE@LISTSERV.CUNY.EDU> > > By Julie MacIntosh > > NEW YORK, July 24 (Reuters) - US Airways Group (U) and UAL Corp.'s (UAL) > United Airlines said on Wednesday they had reached a code-share agreement, > which could boost revenues for both and possibly help US Airways avoid > potential bankruptcy. > > The proposed deal, which would have to satisfy federal regulators, comes a > year after the two airlines failed to cement a $4.3 billion merger. That > proposal fell apart over antitrust concerns, which could be raised again by > the government. > > Under code-share agreements, two or more airlines share route networks as > alliance partners. In this case, passengers would be able to book a US > Airways ticket on a flight operated by United or vice versa. There are also > frequent flier perks and revenue sharing between the two carriers. > > > > "There are huge sets of new markets that this code-share brings to both > parties," said airline industry consultant Michael Boyd. United gets more > access to eastern destinations, but Boyd said the deal could be a bigger > boon for US Airways because it basically opens up the Midwest and West to > the carrier in desperate need of fresh revenue. > > US Airways is on the brink financially, having posted a $248 million > second-quarter loss. It has also defaulted on some of its debt. US Airways, > based in Arlington, Virginia, hopes to convince lenders to renegotiate their > financing terms instead of forcing an involuntary bankruptcy. > > Nevertheless, the deal is the second major piece of good news for the > company in the past few weeks. Earlier this month, the government gave the > carrier conditional approval for a $900 million loan guarantee to get $1 > billion in financing. > > US Airways has said for months that it was talking with several major > competitors about a code-share deal as a way to strengthen its operations. > > "In the past, US Airways lost business to competitors because we lacked > domestic and international scope and marketing partners who can feed traffic > into our network," said David Siegel, the company's president and chief > executive. > > United stressed the alliance was a good strategic fit and would boost > competition and customer choice. > > This is the second attempt in as many years by the two airlines to join > forces in some way. The proposed merger between US Airways and UAL fell > apart last July over antitrust issues. > > The Justice Department threatened to block the merger, saying it would hurt > competition on more than two dozen routes and mean higher fares and fewer > choices for consumers. > > Antitrust concerns could become an issue again unless the airlines > structured their proposed code-share to maintain competition on the routes > they both serve, one antitrust expert said. > > "The question is whether and to what extent it reduces the incentive of one > or the other to compete in one of the markets that the (Justice Department) > identified as a problem," he said. > > US Airways spokesman David Castelveter said the code-share deal did not > specifically address the antitrust concerns voiced by regulators during the > merger review. > > "We will implement code-sharing on a large percentage of our routes," > Castelveter said. "Those concerns will be addressed with the (Transportation > Department) if they have them." > > That agency has between 30 and 180 days to review the proposal. A DOT > spokesman said regulators had not yet received the plan and had no comment. > > But United stressed that it did not see the agreement as an antitrust > matter. > > "The issue here is this is a code-share agreement, not a merger," said > United spokeswoman Chris Nardella. "This agreement does not involve any > activity in which antitrust immunity would be required." > > All of the major carriers have long-standing code-share agreements. This is > no different," Nardella said. > > Castelveter said the airlines may not code-share on routes where they could > not provide convenient connections, or on international routes where they > were prohibited from code-sharing by regulation. > > United, which lost $341 million in the second quarter, is also seeking $1.8 > billion in government loan guarantees to help it recover financially. > > > ©2002 Reuters Limited. > > ------=_NextPart_000_001D_01C23373.B78B71E0 > Content-Type: image/gif; > name="1x1.gif" > Content-Transfer-Encoding: base64 > Content-Location: http://image.i1img.com/images/ads/1x1.gif > > R0lGODlhAQABAIAAAAAAAAAAACH5BAEAAAAALAAAAAABAAEAQAICRAEAOw== > > ------=_NextPart_000_001D_01C23373.B78B71E0-- >
