US Airways Dividend Miles (Pre-FlightFund Merger) - Lauch of Paradise/ Potomac/DC Air/US Airways Express Update

Current plans call for Paradise to be merged into Potomac on October 2, Aviation Daily said.

Potomac will operate as a US Airways Express carrier from Washington National Airport, providing short-haul service in the Northeast and Mid-Atlantic regions using de Havilland Dash 800Qs, the Daily said.

If it gains DOT approval, Potomac projects a November 12 launch date for scheduled services with two aircraft. US Airways also is ready to hand over its Washington National slots to Potomac Air upon approval.
http://news.airwise.com/stories/2000/09/969626342.html

Hopefully this will make it cheaper between Charlotte and the DC area http://www.flyertalk.com/forum/biggrin.gif

"We trust your good intentions in creating the DC Air structure as an attempt to address what would otherwise be an unacceptably high concentration of the Washington market brought about by the proposed United/US Airways merger,'' CO CEO Gordon Bethune said in a letter dated Oct. 9.

"However, we believe that the structure for DC Air which you have developed with Mr. Johnson does not solve this important competitive issue,'' the letter said.

Johnson, while a respected entertainment entrepreneur, has had no experience in the airline business and would rely on United to operate the business, the letter said. ``A sale of the DC Air assets to a strong and well-funded competitor like Continental ... would provide sustainable competition and real benefits to consumers,'' Bethune said.
http://www.nytimes.com/reuters/business/business-continentala.html


Bethune followed with another letter Monday, saying he was ``disappointed'' that Continental had not heard back 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.
http://www.nytimes.com/aponline/business/AP-Continental-DC-Air.html


AND: "The agreement with Mr. Johnson prohibits discussions with third parties regarding any alternative to the DC Air transaction," US Airways said in a statement. Johnson declined to comment.
Testifying before Congress earlier this year, he promised that his startup airline would be ``a viable and totally independent competitor from day one." Yet DC Air would rely on UA & US for some of its equipment and employees and would also lease its jets.

"It has been clear from the outset the DC Air divestiture is a starting point, and not an end point in what will be an active dialogue on possible remedies to competitive issues raised by the merger," said Samuel C. Buttrick, an airline industry analyst at PaineWebber.

"Even with the proposed DC Air divestiture, a combined United Airlines and US Airways has a commanding revenue share in the Washington area and would remain the largest carrier at each of its three airports. That is not in the consumers' best interest."
http://www.nytimes.com/2000/10/10/business/10AIR.html

Bethune is pulling Wolf's chain, but he's also underscoring the transparency of the DC Air deal. Although he is showing how shareholders may be being shortchanged with regard to the pricing on the DC Air assets, they still make out like bandits on the overall per share buyout price premium. In addition, since DC Air will be pretty well controlled by UA, even though they are selling the assets below market, over time they will more than make it back by virtue of a lower level of competition versus a real operator like CO.

If Northwest is forced to divest the Continental stake, the signal to UAL would be that it must offer more far-reaching concessions than it has currently placed on the table in order for the US Airways deal to face any hope of approval, Mann said.

United has offered to sell most of its operations at Washington Reagan National airport to Robert Johnson, chief executive of BET Holdings II. The operation would be named D.C. Air and would serve 44 cities with 122 daily departures from Washington.
http://cbs.marketwatch.com/archive/20001026/news/current/nwac_cal.htx?source=blq/yhoo&dist=yhoo

In the current (11/13/00) Business Week:

MANAGEMENT

Will United's Woes Spread?
CHART: While Service Woes Slam United's Customers...
CHART: ...And Slow the Airline's Growth...Wall Street Punishes Its Missteps
TABLE: How United's Labor Woes Are Spreading
The DC Air Deal: More Likely to Stall Than Fly
ONLINE EXTRA: United's James Goodwin: ''We Didn't Cave''


UPDATE: There is now a new link available: http://www.businessweek.com/2000/00_46/b3707151.htm http://www.businessweek.com/2000/00_46/b3707155.htm


[This message has been edited by doc (edited 11-08-2000).]

I think the prospects of DCAir just got a little bit better with Johnson's sale of BET to Viacom. With $3 billion (with a b) dollars in the bank, it's now somewhat harder to cast doubt on the plan.

In a rare interview, the CEO defends the hefty pay hikes for pilots and explains why he bought US Airways:
http://www.flyertalk.com/forum/Forum50/HTML/002672.html


AND: New York Senator Charles E. Schumer (D) yesterday supported moves to force divestiture of US Airways' landing and takeoff slots at Ronald Reagan Washington National Airport to low-fare airlines. He said he opposed the United Airlines-US Airways merger unless low-fare competitors received all the slots that US Airways proposes to divest.
http://news.airwise.com/stories/2000/11/974404270.html


[This message has been edited by doc (edited 11-17-2000).]

"We've become a little more ambivalent because of the financial duress the industry is under," the paper quotes Carty as saying. "The acquisition of US Airways or any assets of US Airways involves more capital, and therefore we have some ambivalence about spending capital in this kind of environment."

http://cnnfn.cnn.com/2001/06/21/deals/amr/

US Airways Forms MidAtlantic Airways to Prepare for Planned Regional Jet Growth

US Airways is reactivating the former Potomac Air in preparation for its planned expansion of regional jet operations. Potomac Air has been renamed MidAtlantic Airways and will operate as a wholly-owned subsidiary of US Airways Group, Inc., and as part of the US Airways Express network...

...Originally created to form the basis of DC Air as part of US Airways' merger agreement with United Airlines, Potomac Air ceased operations in October 2001.

The carrier, formed in late 2000, began flying operations in early 2001 from Ronald Reagan Washington National airport, using 37-seat Dash-8-200 aircraft. At its peak it served 15 key destinations in the Northeast. Operations were halted with the closure of Reagan National airport following September 11.

http://biz.yahoo.com/prnews/020530/dcth055_1.html

Some of you may recall this:

"Say hello to DC Air"

http://www.flyertalk.com/forum/Forum109/HTML/000783.html

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Please also see:

http://www.flyertalk.com/forum/Forum51/HTML/002726.html