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CNN Today

Airline Mega-Mergers Possible

Aired January 8, 2001 - 4:02 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JOIE CHEN, CNN ANCHOR: The nation's No. 2 airline, American Airlines, is in talks to take over the nation's oldest continuously operating airline -- that's TWA. Now here's what American Airlines looks like today: It has hubs in Chicago, Miami, Dallas-Fort Worth and San Juan Puerto Rico. If the two airlines do strike a deal, TWA's hub in St. Louis would be added. The sale could end St. Louis-based TWA's long struggle to turn a profit, but the word is that the TWA name would not be used.

Some details on the takeover: TWA plans to file for Chapter 11 bankruptcy, part of a complex deal that could clear the way for antitrust approval of United Airlines' pending takeover of U.S. Airways. Now the deal, whose price is not being disclosed, reportedly involves AMR buying a 49 percent stake in D.C. Air, that's a new carrier. To ease antitrust concerns, D.C. Air would have most of the takeoff and landing slots at Washington's Reagan National Airport that are currently assigned to U.S. Air.

Job-wise, American would buy all of TWA's assets and keep all 20,000 of the carrier's employees.

What you really care about: the consumers; some experts say consumers could end up with the short end of the stick if the American-TWA deal and a similar one involving United and U.S. Airways go through.

CNN's Frank Buckley,now, on that part of the story.

(BEGIN VIDEOTAPE)

FRANK BUCKLEY, CNN CORRESPONDENT (voice-over): The current, weary winter of delays and cancellations getting worse if American and TWA come together.

(AUDIO GAP)

The proposed American-TWA merger comes in the wake of another proposed merger between giants United Airlines and U.S. Airways.

(on camera): If the United-U.S. Airways merger and the American- TWA merger are both approved, American and United would control roughly half of the U.S. market.

(voice-over): Which would result, say critics, in less competition and higher fares.

RICHARD COPLAND, AMERICAN SOCIETY OF TRAVEL AGENTS: Over the last year, airline fares have gone up almost 9 percent. You will see this trend continuing, and almost like a seesaw -- as prices go up, as airlines control marketplaces, service goes down.

(AUDIO GAP)

UNIDENTIFIED MALE: ... with less onboard service, and you'll probably pay more for it.

BUCKLEY: But at least one passenger advocate sees the American- TWA merger differently.

David Stempler (ph) says American is really bailing out a troubled TWA and bettering service for passengers.

UNIDENTIFIED MALE: I think this will be a positive benefit for most air travelers, certainly the people who utilize TWA. This is a great boon to them because the situation at TWA was pretty precarious in a financial point of view.

BUCKLEY: If American does acquire TWA, it would mark the end of an airline that started in 1930 after a merger; when Western Air Express merged with Transcontinental Air Transport to form TWA.

Frank Buckley, CNN, New York.

(END VIDEOTAPE)

CHEN: And we want to apologize to our viewers for some of the difficulties in the audio on Frank Buckley's report.

TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com

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