United Air has options on Atlantic - United CEO =
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Wednesday October 29, 5:18 PM EST =
By Kathy Fieweger
CHICAGO, Oct 29 (Reuters) - United Airlines, seeking to get out of bankru=
ptcy protection by next spring, has a number of ways to keep serving Wash=
ington's Dulles airport as a takeover battle between two regional service=
providers grows increasingly heated, United's chief executive said on We=
dnesday.
Regional air carrier Mesa Air Group (MESA) launched an unsolicited bid fo=
r Atlantic Coast Airlines Holdings Inc. (ACAI) earlier this month, after =
Atlantic Coast this summer announced it anticipated its feeder relationsh=
ip with United to end. Instead, Atlantic said it planned to start its own=
low-cost carrier.
The board of Atlantic Coast, based in Dulles, Virginia, rejected the Mesa=
bid and the company now has sued Phoenix-based Mesa, accusing executives=
of insider trading.
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Atlantic Coast also said in its lawsuit that Mesa did not tell the public=
that UAL Corp.'s (UALAQ) United was backing Mesa's bid -- an allegation =
United emphatically denies.
United, the world's second-largest carrier, is operating in Chapter 11 ba=
nkruptcy protection. In the process, it is cutting costs sharply across t=
he board and plans a late spring 2004 exit from the court system.
LOAN GUARANTEE APPLICATION STILL LOOMING
But pension issues and the Atlantic Coast contract are among the remainin=
g tasks before United can file an amended application with the Air Transp=
ortation Stabilization Board for backing of a private sector loan.
"We've got to resolve that (Atlantic Coast situation) and its economic im=
pact on the company before we complete the application," United Chief Exe=
cutive Glenn Tilton said on Wednesday.
He stopped short of saying United would definitively reject the current A=
tlantic Coast contract, which runs until 2010, telling reporters after a =
luncheon speech only that "it's within our discretion."
United last week said it had begun discussions with Mesa about the Dulles=
service and that it hoped to conclude talks in "days, not weeks."
But Tilton added on Wednesday that other alternatives are possible.
"It doesn't have to be a discreet deal," he said. "If you think about the=
choices that we have with respect to Dulles, they're actually also withi=
n our discretion as to what combination of partner aircraft, or our own, =
we use to make sure that we continue to serve our customers."
He indicated that in no case was United simply going to allow its custome=
r base to migrate to a new low-cost carrier started by Atlantic Coast.
"Those are our customers," Tilton reiterated. "It's our brand, it's our r=
eservation process, it's united.com. So the notion that somehow that they=
are fungible and could belong to someone else is not a good idea." =
=A92003 Reuters Limited. =
Roger
EWROPS