Department of Justice Grounds DC Air

Article excerpt

United Airlines-US Airways merger called off

Robert L. Johnson had his opportunity to launch the largest minority-owned airline grounded as the Department of Justice quashed the proposed merger of United Airlines and US Airways.

A spin-off of the proposed merger, DC Air would have been the country's largest minority-owned airline. U.S. Department of Justice antitrust officials gave the thumbs-down to the United-US Airways $12.3 billion merger in July (United was to pay $4.3 in cash to acquire US Airways and assume $8 billion of its debt). "DC Air was a once-in-a-lifetime opportunity the way it was presented to me, and it will probably never come again," says Johnson, founder of the BET network and also a member of the board of directors of US Airways. "I have no interest in owning an airline outside of this opportunity."

DC Air was launched in May 2000 to help win DOJ approval of the controversial merger between the two larger carriers. The spin-off, DC Air, would be made from a divestiture of US Airways' East Coast routes and be based at Ronald Reagan National Airport in Washington, D.C. (see "Will DC Air Fly?" News-points, August 2000). During months of turmoil, politicians; consumer groups, and rival airlines warned that the impending consolidation would give birth to the world's largest airline and that competition would be jeopardized despite DC Air. In midsummer the suspense ended. The DOJ said no.

"If this acquisition were allowed to proceed, millions of consumers--business, government, and families--would have little choice but to pay higher fares and accept lower-quality air service," stated Attorney General John Ashcroft. …