Senate panel opposes United-US Airways merger

Airlines

September 21, 2000|By BLOOMBERG NEWS

WASHINGTON - The Senate commerce committee passed a resolution yesterday opposing United Airlines parent UAL Corp.'s $11.6 billion plan to buy US Airways Group Inc. because of concern that it could spark more acquisitions among carriers.

The nonbinding legislation calls the combination "inconsistent with the public interest" and said it would force rivals such as AMR Corp.'s American Airlines, the second-largest U.S. airline, to make its own purchase.

United, the world's largest airline, and US Airways, the sixth largest domestic carrier, together would deter the start-up of carriers that could provide competition, the resolution said.

United's purchase of US Airways would create a company that controls 40 percent of takeoffs and landings at four of the largest U.S. airports, including Chicago's O'Hare International. US Airways is the No. 2 carrier at Baltimore-Washington International Airport.

The resolution attempts to put political pressure on the Justice Department, which is reviewing antitrust questions raised by the proposed purchase.

"The anti-competitive harm posed by the proposed United-US Airways merger outweighs its benefits," said Sen. John McCain, the Arizona Republican who chairs the commerce committee.

Backers of the resolution said the vote should signal to regulators that senators are upset about the prospect that consumers would have fewer choices among airlines and face higher fares.

UAL shares fell 93.75 cents to $45.25 yesterday. US Airways finished unchanged at $34.375.

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