KAREN WALKER WASHINGTON D.C.
In a bid that may be three-parts political and one-part desire, Continental Airlines has put in a bid to purchase DC Air, the startup carrier that US Airways and United Airlines promise to establish at Washington DC's National Airport as a sweetener to their proposed merger.
US Airways, which is setting up DC Air using slots it owns at Washington National, says it will sell the startup to cable executive Robert Johnson, a director on the US Airways board.
However, Continental's chief executive, Gordon Bethune, has sent a letter to US Airways and United offering $215 million in cash to purchase the slots and gate lease rights that would become the properties of DC Air. In a second letter, Bethune told the chief executives of US Airways and United that he was "disappointed" not to have received a reply to his offer. He pointed out that his offer was some 50% more than what Johnson will pay for DC Air.
Continental says that competition at Washington National - a premium airport because of its central position within the Capitol - would only be improved if an outsider, unconnected to United or US Airways, was allowed to purchase the assets slated for DC Air. "We believe the structure for DC Air you have developed with Mr Johnson does not solve this important competitive issue," says Bethune in his letter.
US Airways says the agreement prohibits discussion with third parties, while United insists that DC Air will add competition as well as help maintain service in markets currently served by US Airways.
While Bethune's letters may be politically motivated - highlighting to Congress the potential anti-competitive issues of the US Airways-United merger - analysts believe that the 119 mainline and 103 commuter slots that such an acquisition would give Continental would be beneficial in this premium market.
Source: Airline Business
