US Airways, UAL alliance review extended

August 23, 2002|By BLOOMBERG NEWS

WASHINGTON - The U.S. government said it needs another 30 days to decide whether a proposed marketing alliance between UAL Corp.'s United Airlines and US Airways Group Inc. would reduce competition.

UAL and US Airways, the second- and seventh-largest U.S. carriers, failed to win approval for a merger last year. The two airlines, neither of which is profitable, told the Department of Transportation on July 25 that they plan to sell tickets for each other's flights to help increase revenue.

The department extended the waiting period before the alliance can begin to Sept. 23 from Saturday. The two carriers may start the alliance after that unless the department extends the period again, begins a formal investigation or takes other action, the agency said in a Federal Register notice.

"The agreements present important issues that require additional investigation by us," the department said. The review focuses on whether the alliance "would significantly reduce competition," the agency said.

The alliance would effectively extend each of the carrier's networks and let passengers connect to the flights operated by the partner. United sought to acquire US Airways in May 2000 and scrapped the bid last year because of regulatory opposition.

US Airways filed for Chapter 11 bankruptcy protection last week and remains in operation. UAL said last week that it also may need to file for bankruptcy protection unless it wins concessions from labor and vendors and receives a U.S. government loan guarantee.

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