United announces US Airways deal

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The world's largest airline got even larger May 24 as United Airlines parent UAL Corp., Elk Grove Village Township, Ill., announced it would buy US Airways, Arlington, Va., in a deal estimated at $12 billion. The move allows United to pair its strength in the Midwest and West with US Airways' strength along the East Coast, the nation's most-trafficked area.

"This combination creates the first truly efficient nationwide network in this country,'' UAL Chairman-CEO James Goodwin.

For US Airways, it creates almost overnight the global carrier the airline has tried to become, said Stephen Wolf, that carrier's chairman. It also gives US Airways shareholders a chance for huge profits as United is offering them $60 a share; the stock closed May 23 at just over $25, though on May 24 it zoomed up to the $48 a share range.

Mr. Goodwin said the acquisition should be completed early next year; it's still subject to approval by regulators. The new combined carrier will be called United, scrapping the US Airways name that itself took the place of US Air in 1997. In a move aimed at pleasing regulators, the new company will sell some of its Washington operations to Black Entertainment Television founder Robert Johnson, who will launch a new carrier named DC Air. United also has said it won't raise fares for two years except to cover fuel and cost-of-living increases.

United's advertising has been some of the most talked about in the industry in recent months. Last year, the airline grounded its "Rising'' campaign from Fallon, Minneapolis. In January, it launched a new effort using the name "United'' and the concept of bringing people together as centerpieces. This month, it unveiled a new international effort from Y&R Advertising, New York, with the tagline "Life is a journey. Travel it well.''

US Airways only recently began using brand advertising again from McCann-Erickson Worldwide, New York, after a hiatus as it struggled to reach agreements with its employee unions.

Copyright May 2000, Crain Communications Inc.

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