24 May 2000

The world's largest air carrier, United Airlines, yesterday agreed to buy America’s sixth-largest airline US Airways Group, for $4.3 billion in cash plus $7.3 billion in assumed debt and leases.

However, it is uncertain whether such a dominant pairing can expect the green light from the Justice Department, which is currently suing two smaller carriers - Northwest Airlines and Continental Airlines – on the basis that their alliance reduces competition on certain routes.

The United / US Air merger would create an airborne colossus - 6,500 flights daily, with multiple hubs on both coasts. By comparison, world number two American Airlines and its commuter affiliates has just 3,600 flights per day.

But United and US Airways insist that little overlap exists between their routes, despite their combined size. Chicago-based United flies mainly east and west, with big international operations in Latin America and the Pacific; US Air is primarily an East Coast airline flying north and south, also to Europe.

The only US city in which there is significant overlap of the duo’s domestic flights is Washington DC where, to allay anti-trust concerns, United aims to dispose of most of US Air's landing and take-off slots at Reagan National Airport.

News source: Wall Street Journal