Continental Pursues US Airways’ D.C. Service
Continental Airlines is making a play for US Airways’ Washington-area service at Ronald Reagan National Airport, saying the rival airline’s plans to sell it to cable executive Robert Johnson to satisfy regulatory concerns over its proposed acquisition by UAL Corp. is anti-competitive.
Continental first made its $215- million offer for the assets of what would become DC Air on Oct. 2, when Chairman and Chief Executive Gordon Bethune formally bid for US Airways’ 119 jet takeoff and landing slots and 103 commuter slots at Ronald Reagan National Airport.
Bethune followed with another letter Monday, saying he was “disappointed” that Continental had not heard from either US Airways or UAL’s United Airlines, whose proposed $4.3-billion acquisition offer is causing US Airways to sell its presence at Reagan National.
Houston-based Continental noted its offer comes at a 50% premium over the $141-million price offered by Johnson, who controls the holding company of Black Entertainment Network and is a US Airways board member.
United spokeswoman Susana Leyva said airline competition can thrive in Washington without Continental’s help.
“At United, we recognized from the beginning when we announced the merger the need to maintain enhanced competition in Washington, D.C., by divesting at Reagan National,” Leyva said. “The creation of DC Air at National is an important benefit provided by the acquisition.”
US Airways did not immediately return telephone calls Monday afternoon. Through his secretary, Johnson declined to comment.
Testifying before Congress earlier this year, Johnson promised that his start-up airline would be “a viable and totally independent competitor from Day 1.” However, DC Air would rely on United and US Airways for some of its equipment and employees and would lease its jets.
The deal already faces intense regulatory scrutiny from regulators, who are worried that the combination of Elk Grove Township, Ill.-based United, the world’s largest airline, and Arlington, Va.-based US Airways, the nation’s sixth-largest airline, would restrict competition and lead to higher prices. They are also worried that United, the dominant carrier at Dulles Airport near Washington, would have too much control over the local market if it acquires US Airways’ assets at Reagan National.
In his letter Monday, Bethune said Continental’s offer guarantees competition from Reagan National on service to Philadelphia, New York, Boston, Pittsburgh and Charlotte, N.C.
“While we have the utmost respect for Mr. Johnson’s success in the entertainment business, he has no expertise in the airline business,” Bethune wrote. “DC Air will be totally dependent on United Airlines to operate the business for it, thus bringing no real competition to this crucial market.”
US Airways shareholders are expected to vote on the merger at their meeting Thursday.
