UAL purchase of US Airways approved by EC

$11.6 billion merger mostly affects U.S.

January 13, 2001|By BLOOMBERG NEWS

United Airlines parent UAL Corp. won European antitrust approval yesterday for its $11.6 billion purchase of US Airways Group Inc. after pledging to give up some takeoff and landing slots in Germany.

The largest airline merger will mostly affect the United States by giving United access to US Airways north-south routes on the East Coast.

Still, because United has a joint venture on trans-Atlantic routes with Deutsche Lufthansa AG under the Star Alliance, United had to eliminate some overlap in flights.

"A substantial barrier to entry or expansion on these routes is the congestion at Frankfurt and Munich airports," the European Commission said in a statement in Brussels, Belgium.

Both U.S. airlines and Lufthansa make daily trips to several U.S. cities from Munich and Frankfurt. In particular, the commission was concerned about routes that link the hubs of US Airways and Lufthansa in Philadelphia, Pittsburgh and Charlotte, N.C.

To alleviate regulatory concerns, United agreed to make slots available in Germany "that will facilitate the market entry of competing airlines," and give consumers a larger choice, the EC said.

United spokesman Andy Plews declined to provide additional details of the divestitures.

"We are very pleased with the commission's affirmation that this merger will preserve competition in the trans-Atlantic marketplace and will deliver the consumer benefits we have outlined," said UAL Chairman James Goodwin.

US Airways Chairman Stephen Wolf called the EC approval "a very significant step."

US Airways and Lufthansa fly between Philadelphia and Frankfurt every day, and US Airways makes daily Philadelphia-Munich trips. US Airways also flies to Pittsburgh and Charlotte daily from Frankfurt.

The proposed UAL-US Airways merger also provoked the commission to step up its investigation of the Star Alliance, the world's largest airline group, which includes carriers such as Scandinavian Airlines System and British Midland Airways Ltd.

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