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UAL Announces Acquisitions of US Airways for $20B

Aired May 24, 2000 - 12:53 p.m. ET


GRETA VAN SUSTEREN, CNN ANCHOR: We are going to go to New York now for the press conference United Airlines is holding about their intended acquisition of US Airways.

Let's listen.

JAMES GOODWIN, UAL CHAIRMAN & CEO: Good afternoon, everyone, and welcome.

As you know, I'm Jim Goodwin, chairman and CEO of United Airlines, and I am delighted to be standing here with Stephen Wolf, the chairman of US Airways.

I am delighted to be here to tell you about this morning's exciting announcement, as I'm sure all of you already know, United and US Airways announce that our boards of directors have approved a definitive merger agreement, in which US Airways will be acquired by united airlines.

This merger creates a combined company offering customers unparalleled convenience and service. By bringing together United and US Airways, we believe we have created a global airline that will provide significant benefits to the communities and customers served by our two companies.

This transaction is a one-step, all-cash transaction valued at approximately $4.3 billion in equity, and in addition, United Airlines will be assuming approximately $7.3 billion in debt and aircraft operating leases, for a total transaction value of approximately $12 billion.

Under this agreement, each share of common stock of US Airways will be converted into the right to receive $60 in cash. Now, based upon US Airways closing price yesterday, that was a premium of about 130 percent; that's clearly a little different today.

Now, if you link United's extensive east/west system with US Airways comprehensive north/south routes on the East Coast, we believe we create the first truly efficient nationwide network.

The transaction will stimulate commerce, jobs and economic development across the United States. Combining United and US Airways creates a global airline that will be better able to deliver significant benefits to millions of passengers and hundreds of communities throughout the United States.

Our new network connecting US Airways' eastern markets with United's west and our international networks will provide passengers with more convenient travel. The two companies together will provide upgraded service and access to the world.

For the passengers and cargo customers of United, this fulfills a geographic gap in our network along the East Coast and offers a new reach to the east and southeast. Passengers will be linked to a system that will directly carry them to commercial centers around the globe and will benefit from the convenience of one airline, one baggage check in and one frequent flyer program.

It's United's plans to continue to serve all cities now served by US Airways. Passengers will benefit from more nonstop domestic flights and United is planning to offer 64 daily -- new daily nonstop flights in the U.S. and 29 new daily international flights.

Passengers will have easier access to the west and destinations in Latin America, the Caribbean, Asia and Europe.

This combination will also provide new competition to other carriers. US Airways' system will allow United to serve the trans- Atlantic, Latin and Caribbean routes more effectively, intensifying competition in those markets, and will improve our ability to reach Asian destinations from across the U.S.

The transaction will significantly enhance the ability of US Airways husbands in Pittsburgh, Philadelphia and Charlotte to grow and compete with other international gateways.

In short, United and US Airways together will create a more efficient global airline network that can improve the quality of service for its customers.

In recognition of the competitive issues connected with this transaction, United Airlines plans to divest significant assets to maintain and enhance airline competition on routes into and out of Reagan National and Washington, D.C.

In connection with this planned divestiture, United has entered into a memorandum of understanding with Bob Johnson, under which he would buy certain US Airway assets at Reagan National and create a whole new carrier. Mr. Johnson is the founder, chairman and chief executive of BET Holdings and a member of the board of US Airways. The new carrier will be the first significant new entrant at capacity- controlled Washington-Reagan International Airport in over a decade. And it will focus on providing service to and from Washington, D.C.

Now United will retain certain assets at Washington-Reagan, including the US Airways shuttle, and the necessary assets for United to fly to Pittsburgh, Charlotte and Philadelphia from Washington- Reagan.

Now, there is clearly a lot of hurdles in front of us, but we anticipate that this transaction can be completed in the fist quarter of the year 2001. The combination will be accounted for as a purchase and as anticipated to be fully accretive to United's earnings per share in year two, following the conclusion of the merger.

We believe that this combination creates the first truly efficient nationwide network in this country, providing unparalleled convenience and customers -- convenience and comfort to our passengers, as well as introducing a new competitive force in the marketplace.

And now I am delighted to turn the podium over to Stephen Wolf.

STEPHEN WOLF, CHAIRMAN, US AIRWAYS GROUP: Good afternoon, ladies and gentlemen. Needless to say, I too am delighted to be here on behalf of US Airways customers, the communities we serve, our shareholders and certainly our employees on what is clearly an historic occasion.

The agreement we are announcing today in which United and US Airways will merge is a milestone in commercial aviation. Melding the route systems and assets of two proud and successful carriers into the nation and world's largest and most comprehensive routes network, much to the benefit of the customers and communities we serve.

Importantly, this is an arrangement that works for US Airways employees. And agreeing to go forward with our merger with united, one of the most important principles guiding our decision was the necessity to achieve long-term security and career opportunities for US Airways employees. A key part of this agreement is our employees will receive a no-furlough protection from the new combined company, precisely as United Airlines employees will. Our employees will have opportunities to participate in the most exciting development in aviation history with a company that will have unparalleled financial strength and competitive presence.

When I joined then USAir four years ago and met immediately with our employees, we developed an aggressive business plan, aimed at making US Airways a world-class global carrier. Toward that end, we made spectacular improvements in our operational performance, resolved our labor agreements, modernized our fleet with the largest Airbus aircraft order in history, and expanded our international service. While significant progress...

VAN SUSTEREN: We now go to Atlanta, Georgia, where Ramsey attorney Lin Wood is holding a press conference. Let's listen.



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