This article from NYTimes.com has been sent to you by psa188@xxxxxxxxx /-------------------- advertisement -----------------------\ IN AMERICA - NOMINATED FOR 6 INDEPENDENT SPIRIT AWARDS IN AMERICA has audiences across the country moved by its emotional power. This Holiday season, share the experience of this extraordinary film with everyone you are thankful to have in your life. Ebert & Roeper give IN AMERICA "Two Thumbs Way Up!" Watch the trailer at: http://www.foxsearchlight.com/inamerica \----------------------------------------------------------/ United Ends Pact With Mesa December 23, 2003 By MICHELINE MAYNARD United Airlines said yesterday that it had ended an agreement to make the Mesa Air Group its East Coast regional carrier if Mesa succeeded in a takeover bid for United's existing regional partner. The action came five days after the Justice Department opened an antitrust investigation into what role United had in an unsolicited offer by Mesa for Atlantic Coast Airlines, which handles flights for United and Delta Air Lines on the Eastern Seaboard. United, which has denied playing any part in Mesa's bid, said it was prepared to start regional service from Dulles International Airport outside Washington, on its own if necessary. It also said it was investigating other alternatives to flights now operated by Atlantic Coast. The Justice Department investigation was disclosed on Thursday, the same day that a federal judge in Washington issued an injunction blocking Mesa's hostile-takeover bid for Atlantic Coast. Also on Thursday, United filed a revised application with the Air Transportation Stabilization Board for $1.6 billion in loan guarantees, which it hopes will provide the basis of its restructuring plan. The board rejected United's original application last year, forcing it into bankruptcy court. The Justice Department, Mesa and Atlantic Coast did not comment yesterday. There was no indication whether the antitrust investigation would go forward. United's corporate parent, UAL, hopes to emerge from court protection in mid-2004 and has arranged $2 billion in exit financing. But it must first resolve a series of obstacles, including obtaining the loan guarantees, dealing with pension liabilities and settling disagreements with Atlantic Coast. Atlantic Coast flies as United Express - with 572 daily departures from Dulles and O'Hare International Airport in Chicago to more than 50 destinations, mainly smaller and medium-size cities - and also as the Delta Connection. Atlantic Coast and United negotiated a 10-year contract in 2000 that remains in force. But even before it filed for bankruptcy protection last December, United opened negotiations with Atlantic Coast, contending that it could not afford to pay the fees set three years ago. The talks broke off in July, when Atlantic Coast said it would reconstitute itself as a low-fare carrier, Independence Air, that would serve the East Coast beginning next year. Atlantic Coast officials said they feared that United would ask a bankruptcy court to terminate their agreement and impose the lower fees it had sought. At the same time, Atlantic Coast said it wanted to compete in the growing low-fare market, which it could not do as United Express. In the meantime, Mesa made its unsolicited takeover bid for Atlantic Coast, buoyed by a memorandum of understanding in which United pledged to use a Mesa-owned Atlantic Coast as its regional carrier if the takeover was successful. Yesterday, United said it had canceled the arrangement, which it said was nonbinding. Douglas Hacker, the airline's senior vice president for strategy, said in a statement that the deal "no longer provides a good basis for United's business planning." The United-Mesa deal had not generated much Wall Street enthusiasm. Last week, Jamie Baker, an analyst with J. P. Morgan Chase, said he opposed the combination, seeing Mesa as a stronger airline as an independent competitor, with better revenue and earnings prospects than it would have in combination with Atlantic Coast. While a merger would have created a bigger airline, "a stand-alone Mesa looks good in reality," Mr. Baker wrote. Having ended the Mesa deal, Mr. Hacker said United would examine its other alternatives. He said it remained committed to its Dulles hub and the cities it serves from there. "As a prudent business matter,'' he added, "we also have completed planning for the appropriate aircraft and baggage-handling capabilities to maintain United Express service intact at Dulles, should it become necessary." http://www.nytimes.com/2003/12/23/business/23air.html?ex=1073188100&ei=1&en=c476b8a8743ddfc4 --------------------------------- Get Home Delivery of The New York Times Newspaper. Imagine reading The New York Times any time & anywhere you like! Leisurely catch up on events & expand your horizons. Enjoy now for 50% off Home Delivery! 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